Fewer customers shopping around for auto insurance, but nearly half who do switch insurers: survey

The percentage of auto insurance shoppers has hit a six-year low, but the percentage of those shoppers who select a new insurer is at a six-year high, according to the J.D. Power and Associates 2013 U.S. Insurance Shopping Study.

The study, now in its seventh year, looks at shopping and purchasing behaviour, in addition to overall satisfaction among customers who recently purchased insurance. It takes into consideration (in order of importance): price, distribution channel and policy offerings.

Of the 23% of auto insurance customers who shopped for a new insurer over the last 12 months, 45% switched insurers. That’s the highest rate since the study began measuring customer retention in 2008.

The switching rate among shoppers was at a low of 33% in 2010 and has been steadily increasing. However, the proportion of insurance customers who shop has decreased from a high in 2011 of 33%, according to J.D. Power.

Overall customer satisfaction with auto insurance companies hit an all-time high in 2012 or 804 out of a 1,000-point scale. Overall new buyer satisfaction with the auto insurance shopping experience averages 828 for the third year in a row, following a three-year decrease from 858 in 2008.

“Unlike many other industries we measure, policy retention rates for personal auto insurance in the U.S. market average 90 percent,” said Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates. “With customer satisfaction generally high and climbing, this industry has witnessed fewer customers shopping, but those who are shopping are serious about switching insurers.”

According to J.D. Power, when selecting a new insurer, insurance shoppers are very cost-sensitive and place more importance on price when it comes to overall purchasing experience than on how they purchase their policy — whether from a local agent, a call centre or online.

“Insurance companies need to be creative in order to differentiate themselves in this very competitive market,” said Bowler. “Providing customers the freedom to choose their preferred contact channel, providing and clearly communicating discount options and a variety of coverage options are just a few ways insurers can appeal to shoppers.”

However, the study finds that the importance of the insurer’s website for new buyers has increased to 24% in 2013, up 2% from last year. The influence of the call centre representative among customers selecting a new insurer has decreased to 20% from 22% last year.

“As more shoppers are buying their insurance online, it’s vital that insurance companies provide a high-quality and effective Web experience, whether customers are accessing the site on a desktop computer, a tablet or a smartphone,” Bowler added.

“Customers want a site that’s easy to navigate, allows them to get a quote and even complete the purchase without having to speak with an agent or call center representative. If they’re not able to get that from one insurer’s website, they will quickly move to the next insurer’s site.”

The 2013 U.S. Insurance Shopping Study was based on responses from more than 16,900 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 12 months and included more than 50,000 unique insurer evaluations. The study was fielded by J.D. Power in January 2013.