In a departure from my main project today I had the opportunity to talk to Garett Lasewicz, the manager of internet marketing applications at Liberty Mutual. One of my main questions to him was why the percentage of car insurance policies bought on the internet varies so widely between the United Kingdom and the United States. It can be as high as 96% in the UK, with an industry average of around a third. It is much lower in the United States. Between us we managed to conclude that there were three main reasons for the differences.

The first was the complexity of the purchase. In the UK we have an organization known as the Motor Insurers Bureau, In the case of a collision with an uninsured driver then this organization will pay for the damage to your car, every insurer underwriting motor insurance is obliged to contribute to its funding. In the US no such body exists, so your policy must provide adequate cover against being hit by an uninsured or underinsured driver. In addition to this legislation varies from state to state, adding to the complexity of the product. A liberty mutual salesperson can therefore be very reassuring in ensuring you have the correct level of insurance.

The second reason was the expectation that insurance in the US is sold through an agent, such agents have been able to maintain a stranglehold on their market by lobbying for state laws which prohibited direct marketing in some states. In addition agents have for so long been seen as the way it’s done that habit is a major part of the reluctance to change. Interestingly the companies which are the most aggressive direct marketers such as Gieco most closely resemble the companies in the UK both in terms of their structure and their marketing approach. Where Liberty Mutual emphasize responsibility and doing the right thing, Gieco are a very gimmicky advertiser, Much like Shielas wheels, Esure and other such companies which have so rudely interrupted my daytime TV viewing pleasure with their advertising.

The third reason is price, insurance in the UK is cheaper, this is largely due to the fact that the healthcare system at home is better, at least in the respect that you do not have to pay at the point of use for it. Coupled with the aforementioned fact that there is no requirement to protect against underinsured drivers this leads to a cheaper overall product and as such the purchase process may be given less thought than in the US.

It was agreed that as time goes by it is more likely that transactions will be completed on the internet. For me this is actually something of a sad thing. In my short time at Liberty Mutual I have seen a company that cares deeply for its customers, Something which I have never felt in my, unfortunately numerous, dealings with UK insurance companies. This is something which I hope Liberty can keep whilst at the same time taking the fullest advantage of new markets.