In a recent user study Corporate Insight conducted for P&C Insurance Monitor, we uncovered an interesting trend: customers seemed to be less deductible-savvy for auto insurance than they were for other aspects of their financial picture.

In our similar studies on health insurance, respondents have often spoken of changing their coverage as they get older or their health changes. In investing and retirement studies, they have talked about changing their investment strategy as their life situations change. Not everyone, certainly, but usually a meaningful amount of people at least understand that as their lives change, they should make changes to health or retirement plans. And yet in this study, respondents mostly reported that they copy their policy specifics when they change insurers, or that they rarely make changes.

What’s more, when we tasked users with updating their deductibles to save money, most lowered their deductible amount, which would raise their monthly premium; the only way they would save money would be to have an accident. (Not a savings strategy endorsed by Corporate Insight.)

There is a potential danger to customer retention here. A person who has inappropriate coverage stands a greater chance of dissatisfaction, either in the price they are paying for the premium or their out-of-pocket when they make a claim. And a dissatisfied customer is a target for a competitor to lure away from you.

Interestingly, we did not encounter any tools aimed at helping people understand deductibles or ensure an appropriate level of coverage for themselves. Several study participants did demonstrate a willingness to engage with educational tools aimed at explaining coverage, indicating that educational materials can be successful.

Notably, users in this and numerous past studies have shown an unwillingness or inability to do math themselves in order to understand the information shown on a page. This should not surprise insurers. However, several insurers gave little clarification on what changes to a deductible or coverage would do to a policy’s bottom line. This put the onus on the user to determine whether a change would help or hurt their bottom line.

If your product is truly competitive, educated consumers should be your goal. Insurers should therefore investigate and consider ways to make their customers more savvy, such as intuitive tools that do the math for policyholders and prospects to help them optimize their coverage.

To learn more about the specifics of how to retain auto insurance customers by strengthening the user experience, register here for our upcoming free webinar on the topic, which will take place on Wednesday, June 10 at 2:00 PM EDT.

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