Los Angeles, CA (PRWEB) June 24, 2014
Commercial auto and truck insurance has a buyer power score of 3.3 out of 5. This score reflects a buyer's moderate ability to negotiate lower pricing. “Buyer power is strengthened by low market concentration, low product specialization and low price volatility in the insurance market,” says IBISWorld business research analyst Jordan Weinstein. On the other hand, vendor and supply chain risks, switching costs, a lack of substitutes and rising demand for insurance weaken buyer power.
Low market share concentration and low product specialization have made the commercial vehicle insurance market highly competitive among suppliers. Buyers benefit from a fragmented market because there are many suppliers to choose from. In addition, commercial vehicle insurance is homogenous across suppliers. As a result, suppliers have to compete on the basis of price and service. Buyers are able to negotiate a lower price by pitting suppliers against each other. Moreover, price volatility during the three years to 2014 has been low and is forecast to remain low from 2014 to 2017. “Low price volatility allows buyers to consider shorter policy terms because there will not be any drastic price increases,” says Weinstein.
Despite the gains in buyer power, vendor and supply chain risks weaken buyer power. Insurance suppliers face upward price pressure from their own suppliers, which is being passed on to buyers as higher prices. With no insurance substitutes available, buyers must absorb these higher prices. Furthermore, it is difficult for a buyer to switch to a new supplier. The amount of time and labor required to acquire a new supplier and the loss of a relationship and current discount rates are high. Additionally, demand is increasing, which weakens buyer power because more buyers are competing for insurance, making suppliers less inclined to negotiate. Buyers that bundle other commercial insurance with their vehicle insurance and invest in lowering loss risk can better negotiate a favorable price. Major vendors include Allstate Corporation, American International Group Inc., Farmers Group Inc. and Geico. For more information, visit IBISWorld’s Commercial Auto & Truck Insurance procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of commercial auto and truck insurance. Buyers are businesses that use vehicles for commercial functions, such as errands, sales calls, cargo transportation, construction and passenger transportation. Similar to consumer vehicle insurance, commercial vehicle insurance provides financial protection against physical damage, bodily injury and liabilities that could arise from traffic collisions, natural disasters and theft. This insurance includes coverage for cars, vans and trucks, which range from pickup trucks to semitrucks. Insurance providers are insurance carriers, and agents or brokers act as intermediaries between carriers and buyers. This report does not include cargo insurance, commercial property insurance or general liability insurance.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.