Mediaboss Marketing

Progressive offered a rare look inside their strategic playbook in a recent second quarter earnings report. Describing the firms market share in key customer segments, the report highlighted one group as its most significant growth opportunity. They are called the Robinsons, and if youve listened to any recent interviews with Progressive CEO Tricia Griffith, you will likely have heard about them.

The Robinsons are a segment of the property and casualty (P&C) insurance marketplace that includes households who own a home and a car and place the insurance on both with the same insurer as a bundle.

Any bundle of Home+Auto will do even if the household has two cars and two drivers, or one car and one driver, or three cars and three drivers. They all represent the ideal scenario for lifetime value in the eyes of big insurers like Progressive. By bundling auto and home policies for these Robinson families around the nation, insurers unlock the secret formula for retention, advocacy, and steady growth, while perhaps only bearing the expense of taking one onboarding process.

J.D. Power data corroborates this theory. By analyzing data from our annual Auto Insurance Study, which is now in its 22nd year of publication, we were able to find that customers in this Robinsons segment are incredibly lucrative for insurers. Specifically, we found that customer intent to renew with their current insurance provider is 53% among the Robinsons, significantly higher than any other customer segment.

This group also has the longest tenure with their current carrier of any other segment, with 45% of Robinsons having been with their insurance provider for 11 years or more. Additionally, 41% of Robinsons select their carrier in order to bundle home and auto policies, creating a Holy Grail scenario for insurers.

That ability to deepen a relationship at a household level for decades is what insurance executives have in mind when they speak about customer lifetime value.

Future of the Robinson Family in Question

While the concept of segmenting and targeting specific insurance personas is nothing new, the industrys obsession with this segment of potential super bundlers is particularly noteworthy right now because their very existence is at risk. You see, for all the talk of ideal customer profiles, current market dynamics are threatening to break up the Robinsons.

A toxic combination of record high numbers of serious collisions, skyrocketing used-vehicle valuations and surging repair costs have steadily driven auto premiums higher, sending record numbers of Robinsons back to the marketplace to shop for new, cheaper policies. According to our data, quotes on new auto insurance policies have increased to 11.8% during the past quarter. Worse, weve found that rampant customer frustration with rising auto premiums is driving significant declines in customer satisfaction with home/auto bundles, with nearly one-third (31%) of bundlers now saying that they definitely will switch their home insurer if they switch their auto insurer after an insurer-initiated auto premium increase.

Rising Auto Rates Affecting Bundle Strategy: J.D. Power

Meanwhile, more auto insurance customers than ever are turning to usage-based insurance (UBI) policies to lower their monthly payments. Participation in UBI programs has doubled since 2016, with 16% of auto insurance customers now participating in such programs.

The combined effect of these disruptions to the status quo in the P&C space is a fragmentation of the ultra-valuable Robinsons segment. In theory, that Robinsons family tree, which currently represents an opportunity to bundle a car and a home policy, and maybe even some life insurance and toy policies on things like motorcycles and boats, runs the risk of migrating into a less valuable, less loyal segment.

Targeting Lower Value Customer Segments

Progressive has names for these segments too. There are the Wrights, who look just like a Robinson, except they are not bundling; the Dianes, who rent and have any car and any driver; and the Sams, who seem to only have car insurance, are monoline auto policy shoppers but can have multiple cars. Perhaps not surprisingly, customer loyalty and total lifetime value declines for each segment, with the Wright family typically renewing with the same carrier at a rate of 45% and Dianes and Sams showing the highest degrees of price sensitivity and inclination to shop for a new insurer.

Its clear from Progressives strategy playbook that every savvy multi-line personal insurance carrier would much rather bundle the Robinson family tree than watch them unbundle themselves to take advantage of lower-cost UBI programs. But, the current dynamics of the marketplace may have other plans. That puts the focus for insurers squarely on the overall brand experience their customers are receivingacross all linesand on understanding how changes in one area, such as telematics adoption in an auto policy, can affect the entire customer journey. Bundling small businesses is now a thing too.

If insurers are going to increase their market share in the valuable Robinsons segment, theyre going to need to track every aspect of the Robinson customer experience and act quickly to address any gaps where they could be losing them to cost pressure or some other variable. In the long run, having loyal customers with multiple policies helps grow total premium faster and with less expenses. Keeping the Robinsons happy means that insurers are going to need to adjust course from their current path, to be household-centric versus product-centric.

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The rest is here:
Viewpoint: How Progressives Relationship with The Robinsons Could Be at Risk - Insurance Journal