Study: Insurance Consumers Shop Around Less, Switch More Often

Top Five Auto InsurersA study from J.D. Power and Associates found that the rate at which policyholders looked at the market for a new insurer is at its lowest point in a half-decade but that those who did shop around changed carriers almost half of the time.

The sixth year of the firm’s U.S. Insurance Shopping Study found that only 25 percent of those surveyed had researched a new auto insurer in the past year, dropping 8 percentage points from 2011 and signifying the lowest rate since the study began.

Of those seeking new insurers, 43 percent ended up switching their carrier, representing a jump of 3 percentage points from last year and the highest rate since researchers began evaluating retention in their 2008 study.

“Although fewer consumers are shopping for insurance, more current customers who do are willing to make a switch based on competitive quotes,” Jeremy Bowler, senior director of the firm’s global insurance practice, said in a statement. “The increase in the proportion of shoppers actually switching suggests that fewer price-checkers are gathering quotes they are less likely to act upon.”

The average savings from switching insurers dropped to $359 this year from $412 in 2010, according to the statement.

The Hartford on Top in Rankings

The study also gauged customer satisfaction with specific insurers using three factors: distribution channel, policy offerings and price.

Under those factors, The Hartford was ranked on top with a score of 857 on a 1,000-point scale. The study noted the carrier stood out with its policy offerings and price. Liberty Mutual followed in second place with 850 points, American Family placed third with 845 and Auto Club Group placed fourth with 842.

Study Finds Limited Impact of Advertising Funds

This year’s study found the chance that a customer shops around is at a low point at a time when companies are pouring billions into luring them away from competitors.

“The industry spent $5.7 billion on advertising and allowances in 2011, but this increased [spending] does not appear to have generated a commensurate increase in market churn,” stated Bowler, who cited an analysis from Dowling and Partners LLC that found that industrywide advertising costs rose 12 percent between 2010-11.

The study also found that a little more than half of consumers looking to switch insurers start their search by trying to find cheap auto insurance online rather than through agents or over the phone.

Aside from the J.D. Power and Associates study, shoppers looking for evaluations of their insurer can also visit their state regulator’s website to find insurer ratings and publicly posted data on customer complaints.

This year’s study is based on more than 50,000 insurer evaluations and responses from more than 16,100 consumers who got a policy quote from at least one insurer in the past year.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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