The insurance industry is known to be recession-proof. But when the recession is the result of a pandemic and a world that feels out of control, the industry’s performance is anybody’s guess.
The insurance industry has more than weathered the financial recession—in fact, profits are growing and M&A activity is up. Yet, the industry’s advertising spend doesn’t reflect the industry’s resiliency.
We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.
Steady Growth and Activity Exceeded Expectations
Despite the inherent in-person nature of mergers and acquisitions in the insurance industry, social distancing and working from home failed to have a strong impact on the number of completed M&As in 2020.
There were a total of 744 insurance agency mergers and acquisitions last year, which is up about 20% from 2019. And despite low expectations, the second half of the year saw the highest number of transactions in that time period in 5 years—102 in total.
“We think the year ended surprisingly well, given the difficult circumstances the industry found itself in,” said James Lynch, the FCAS, senior vice president, and chief actuary of Triple-I.
Triple-I forecasts continued strength for the industry, predicting a 6.1% increase in net premiums in 2021.
Insurance Becomes More Digital
Globally, digital adoption within the insurance industry increased 20% in 2020. This shift is shown throughout the industry—from negotiating M&As to filing claims. In fact, consumers showed a strong preference for filing claims digitally, and approximately 39% who filed auto and/or property claims in 2020 did so via a mobile app, a website portal, or email.
The same digitalization has affected how businesses complete M&As. Social distance requirements mean that the initial meetings between buyers and sellers, where they would generally build relationships and rapport, have been forced into virtual spaces.
Relationships are just one part of the process, too. Key points in the process, such as signing documents or reviewing a contract as a team, are now digitized.
Despite the industry’s growth and heightened activity, the overall ad spend has decreased significantly. Insurance brands in the B2B space spent just $3.1 million in January 2021, which is a 26% decrease YoY.
2020 did see a 20% increase in M&As in the insurance space, and are expected to keep rising through 2021. This may suggest that the decrease in ad spend is a case of reducing ad spend to keep up with existing client demand.
So far, the year’s biggest spenders are consistent with last year’s biggest spenders: Geico, Progressive, Liberty Mutual, State Farm, and Allstate.
As insurance activity surges, we’ll track advertisers to see how businesses market their services.
For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.