Online Auto Policy Purchasing Reaches a Critical Mass

By Nathan Conz

Traditionally, auto insurers have best leveraged their Web sites by offering online rate quotes. In fact, more than half of the customers who purchased auto insurance from an agent in the past five years actually obtained a quote online. And while quoting still dominates the online landscape, insurers are now seeing some success converting those online inquiries directly into online sales.

Reston, Va.-based comScore, an Internet consumer behavior analyst, recently released an online auto insurance activity study that showed 58 percent annual growth in the number of auto policies purchased online in 2006. Quoting only grew 15 percent over that same period.From a purely numerical standpoint, however, online quotes far exceed online purchases. "It's obviously much quicker to get a quote than it is to actually get through to a policy purchase," says Kevin Levitt, vice president of comScore marketing solutions and a contributor to the report. "But insurers are really paying greater attention to how to make the process of getting from a quote completion to [a policy purchase] more simple. That's what I think the data is reflecting, the fact that insurers are pushing online conversion more and more."

Many insurers have redesigned their public Web sites, others are using Ajax technology and some are leveraging data from complimentary databases to help fill out forms faster. "It's all focused on efficiency, speed and making it easier on the consumer to get through the process," Levitt says.

The growth in policies purchased online can be attributed to several factors, Levitt says. 73 percent of U.S. households have broadband Internet access, up from 62 percent a year ago. Meanwhile, consumers are getting more and more comfortable completing transactions online.

Rate quoting, though, is still the key to most carriers' online efforts. Case in point - 6.5 million quotes were submitted online in the fourth quarter of 2006, while only 450,000 policies were purchased.

As a result, carriers are investing heavily in search engine keywords and sponsored links, says Levitt. And because quoting is such a large part of insurers online business, most of those sponsored links take consumers directly into the quoting process.

"The promise of the Internet is its measurability, but also its ability to target. You see that reflected in what auto insurers are doing today," Levitt says. "A lot of technologies right now are focused on cutting down the time it takes consumers to move through the quote process."

Going forward, insurers would do well to increase focus on converting rate quotes into online policy purchases. After all, getting customers to switch carriers is a big part of the auto insurance business, and in the future it's likely customers looking to switch will be looking to do so online. According to the comScore report, 65 percent of consumers would consider purchasing their next auto policy online.