The fragmented auto insurance customer experience is set for disruption, according to a new report by Deloitte.
The report, “Reinventing the insurance customer experience for loyalty,” highlights how collaboration among original equipmen
t manufacturers (OEMs), insurers and captives can drive the future of auto insurance while attracting and retaining customers.
OEMs and auto insurers share a similar woe. Customer loyalty for OEMs reache
d an eight-year low in 2023, while insurers face churn in the wake of rising auto premiums and changing needs.
Citing a 2024 J.D. Power Shopping Study, Deloitte reported that 49 percent of auto insurance consumers actively shopped for a ne
w policy in the past year, likely fueled by auto insurance premium increases that averaged 26 percent between 2023 to 2024.
Declining claims experience is another factor adding to the rise in auto insurance shopping.
Providing a seamless insurance journey for customers requires OEMs and their captives to create a mutually beneficial relationship w
ith insurers and customers to build loyalty, boost profitability and define the future to secure a competitive advantage, the report stated.
With electric and automated vehicles set to take over roads soon, there is n
o better time to disrupt the current process for obtaining auto insurance.
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The potential onset of autonomous driving regulation could shift liability away from the driver to OEMs, captives and system partners (e.g., software companies).
“To prepare, companies should understand these emerging developments and risks and act on the associated insurance
needs. Joining the mobility-insurance value chain now could give OEMs, captive
, and carriers a chance to dictate how change happens and secure market share and competitive advantage,” the report’s authors stated.
Other factors disrupting the customer experience include new competitors, data ethics and consumer trust.
Customers want a seamless experience and a one-stop shop to address their needs and save time. Deloitte found that “1 in 3 U.S
. consumers are interested in purchasing ’embedded’ insurance directly from the manufacturer, citing cost, convenience, and streamlined purchasing as primary benefits, with even greater interest globally.”
In addition, 60 percent of U.S. consumers want connected vehicle features such as maintenance updates and vehicle health reporting, with similar levels of interest in safer routing, collision prevention and maintenance forecasts based on driving habits.
“OEMs, captives, dealers and carriers should consider integrating personalized insurance offerings into a set of streamlined purchase, leasing, and repair processes that incentivize customers to stay within the brand,” the authors added. “Collaboration could allow insurers, OEMs, and captives to banish pain points and invent new, desirable outcomes for customers—effectively building a one-stop shop through undeniable convenience.”
A process that is ripe for change, an already shared experience among stakeholders and a desire to stay connected with the customer throughout a vehicle life cycle are just some of the reasons to focus on insurance as the catalyst for change and improved customer experience.
