J.D. Power and Associates Reports: A Growing Number of Shoppers Are Switching Auto Insurance Providers
WESTLAKE VILLAGE, Calif., April 30, 2012 /PRNewswire/ — The auto insurance shopping rate has reached the lowest point in the past five years, with only 25 percent of insurance customers indicating they shopped for a new insurer in the past 12 months, down eight percentage points from 2011, according to the J.D. Power and Associates 2012 U.S. Insurance Shopping Study(SM) released today.
The study, now in its sixth year, examines consumer shopping and purchasing behaviors and overall satisfaction among buyers who recently purchased insurance across three factors (in order of importance): distribution channel; policy offerings; and price.
While only one-fourth of auto insurance customers shopped for a new policy, 43 percent of those shoppers switched carriers–the highest rate since the study first began measuring retention in 2008, and an increase of 3 percentage points from 2011.
“Although fewer consumers are shopping for insurance, more current customers who do are willing to make a switch based on competitive quotes,” said Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates. “The increase in the proportion of shoppers actually switching suggests that fewer price-checkers are gathering quotes they are less likely to act upon, perhaps a direct result of the lower typical savings derived from switching, which has decreased from an average of $412 in 2010 to only $359 in the past 12 months.”
Bowler notes that customer retention rates are increasing at a time when auto insurance companies are spending more money to entice customers to switch providers. Industry-wide, advertising expenditures increased by 12 percent in 2011, compared with 2010, according to an analysis of statutory filings data for 2011 performed by Dowling and Partners, LLC.
“The industry spent $5.7 billion on advertising and allowances in 2011, but this increased spend does not appear to have generated a commensurate increase in market churn,” said Bowler.
The study finds that 52 percent of auto insurance shoppers start their shopping process online, and 73 percent visit at least one insurer’s Web site at some point during their shopping experience. More significantly, 32 percent of customers solely obtained quotes online, and today 34 percent of all recent shoppers state they would most prefer to purchase their new policy online.
“Shoppers now expect to be able to visit an insurer’s Web site and complete their purchase in the same visit,” said Bowler. “In most cases, shoppers can compare many policies online and narrow down their search field entirely via this self-service paradigm. From that point, they can then decide if they need to speak with an agent or to continue their online purchase process.”
Insurance Shopper Customer Satisfaction Rankings
The Hartford ranks highest among auto insurers in providing a satisfying shopping experience, and receives a score of 857 (on a 1,000-point scale). The Hartford performs particularly well in policy offerings and price. Rounding out the top three highest-ranked insurers are Liberty Mutual (850) and American Family (845).
The 2012 U.S. Insurance Shopping Study is based on responses from more than 16,100 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 12 months and includes more than 50,000 unique insurer evaluations. The study was fielded from January to February 2012.
Customer Satisfaction Index J.D. Power.com Power Circle Ranking Ratings (Based on a 1,000-point scale) For Consumers The Hartford 857 5 Liberty Mutual 850 4 American Family 845 4 Auto Club Group 842 4 Nationwide 841 4 Amica Mutual 839 4 State Farm 839 4 Erie Insurance 836 4 MetLife 834 4 Auto-Owners Insurance 832 3 GEICO 832 3 Ameriprise 830 3 Auto Club Group of So. California 828 3 Industry Average 828 3 Safeco 825 3 21st Century 824 3 Farmers 821 3 Allied 820 3 Esurance 819 3 Travelers 819 3 Allstate 817 2 AAA NCNU Insurance Exchange 816 2 Progressive 815 2 GMAC 808 2 Mercury 808 2 * USAA 878 5
*USAA is an insurance provider open only to U.S. military personnel and their families and therefore is not included in the rankings.
Power Circle Ratings Legend:
5 – Among the best
4 – Better than most
3 – About average
2 – The rest
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company providing forecasting, performance improvement, social media and customer satisfaction insights and solutions. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
McGraw-Hill announced on September 12, 2011, its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial’s leading brands include Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.
No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate
SOURCE J.D. Power and Associates