Driving Multi-Billion Dollar Growth in a “Commodity” Insurance Market
Client Situation
A leading insurance company was experiencing flat to declining growth for its car insurance offers. Competitive direct-to-consumer car insurers (e.g. Geico) were stealing market share by setting low prices that our client could not match because of its extensive dealer network. Meanwhile, our client's management believed that car insurance had become a commodity and that price was all that mattered to consumers.
Demand Strategy Approach
The Cambridge Group built a Demand Landscape to identify the most valuable consumer segments who were motivated more by benefits than by price. We developed new insights and used CDA to determine exactly which features were most valuable to target consumers – and most profitable to offer to them. We also identified significant opportunities to differentiate offers as well as leverage the agent network, transforming the channel from a weakness to a strength.
Results
One year after completing the strategy:
- Estimated 20% increase in incremental car insurance premiums
- Customized premium policies projected to be almost 40% of sales by 2008
- Take rates among customers in test states significantly higher than initially estimated
- Significantly growing share and improving agent "win rate"
- Exploring customized policies in other "commodity" lines of insurance