ABSTRACT
The U.S. Auto insurance market is experiencing a major restructuring. Consumers are relying less on their agents and looking more to direct insurers such as GEICO, Progressive and AIG. This shift is the result of gradual but powerful market forces that have emerged over the last decade -- massive advertising and branding designed to drive consumers directly to an insurer's call center or web site, the emergence of more sophisticated pricing models to accurately estimate the price point at which any risk profile becomes profitable and should be insured, and increased consumer acceptance of the direct response model. Direct insurers gain access to richer data on customers, which in a traditional agency model will reside mostly with the broker. Better data enables insurers to conduct better analysis and gain valuable insights which raise customer lifetime value. Over the next decade, these market forces are expected to accelerate the erosion of share of agent-produced business, both independent and captive. Sustainable growth will go to those carriers that can invest in building the right capabilities to grow the direct channel while managing channel conflict.

SHIFT TO DIRECT RELATIONSHIPS - DIRECT IS GROWING
Direct-to-consumer auto insurers like Progressive, GEICO and AIG control 15.5% of the market and are growing about twice as quickly as the overall segment.