Even as advertising and marketing budgets shrink across the board, auto insurers continue sending out a steady stream of marketing direct mail offers. Mintel Comperemedia, a service that provides direct marketing competitive intelligence, says nearly 3 billion auto insurance direct mail offers were delivered to American mailboxes from Q2 2008 to Q1 2009. This is nearly the same number sent one year prior, despite drastic changes in the economy. To top it off, the past two years’ mail volume represents a high for the industry: five years ago, auto insurers sent less than half as many offers.
“The recession brings new challenges, like rising repair costs and more uninsured motorists, to the auto insurance industry,” comments Daniel Hayes, vice president of insurance services for Mintel Comperemedia. “Insurers realize higher rates won’t bode well with cash-strapped consumers, so they’re using direct mail to communicate policy changes with drivers.”
Daniel Hayes points out that rate increases are necessary for auto insurers to remain profitable. Annual direct written premium (DWP) for private passenger auto insurance—which grew around 8% annually in the early 2000s—has fallen flat in recent years. In 2007, for the first time since 1993, annual DWP actually fell by 0.4%. Add to that people cutting collision coverage and increasing deductibles to save money, and there’s a definite need for insurers to boost revenue.
“Despite proposed rate increases, auto insurers still focus on finding savings for individual drivers,” states Daniel Hayes. “The top three themes I see in auto insurance direct mailings are saving over competitors’ rates, accident forgiveness and rewards for safe driving.”
Mintel Comperemedia reports that from Q2 2008 to Q1 2009, Geico was the top mailer of auto insurance offers, sending nearly one-third of those tracked. State Farm followed with 16% of total mailings, while Liberty Mutual, The Hartford and Allstate took the third, fourth and fifth top spots, respectively. Together, these top five mailers accounted for 70% of auto insurance direct mail tracked by Mintel Comperemedia.
