• Consumer expenditure for Automotive insurance was $134,417,010 in the year 2008
• Market is highly fractionated
The graph below shows that the top 4 companies State Farm, Allstate, Progressive and Geico account for 43.3 % of the market.
The Insurance industry can be structured in the following ways:
• Distribution Type
| |CAPTIVE |INDEPENDENT |DIRECT |
|DESCRIPTION |Insurance agent who offers |Independent broker providing |Buying insurance directly |
| |products for a single |insurance from numerous companies. |from the insurance company|
| |company | | |
|EXAMPLES |State Farm, Farm Bureau |Travelers, Nationwide, Allstate and|Geico, |
| |Insurance, Allstate |many other smaller regional |AAA, Progressive, |
| | |companies. |Esurance |
|STRATEGY |Build relationships with the|Provide best prices through |Appealing to the consumers|
| |customer through exceptional|numerous options. |through the ease of the |
| |service. | |internet. |
|COMMUNICATIONS STRATEGY |Moderate |Aggressive |Aggressive |
• Government Entity
The insurance industry is a unique and highly regulated industry. Each state has different laws and regulations on how much coverage is required.
• Geographic Scope
Only a limited number of the 500+ automotive insurers operate nationwide, while many are small regional insurers.
• Marketing Strategy
There are many factors within the market which affect each of the insurance companies ranging from the big companies to the small ones. Some of the insurance companies are national brands or state specific brands or sell directly to the consumer.
Insurance products within the market include:
|Main Products |Add-On Products |
|Automotive |Renters |
|Homeowners |Fire |
|Life |Health |
|Business |Boatowners |
• Price Determination
There is no universal low price within the insurance industry, and it has been found through research that companies cannot be differentiated on the basis of price due to the following reasons:
• Preferred risk segments:
Each insurance provider provides a price depending on the market segment which would prove most profitable for them and has the least risk involved.
• Geographic area:
Depending on the companies’ scope which ranges from national to regional
• Personal Information of Insured
Personal driving records, specifications of car etc also play a role in the determination of insurance provided to the consumer.
• State Farm was founded in 1922 by a retired farmer, George J. Mecherle.