Survey: Auto Insurance Shopping Hits New Low, Switching New High

The rate that consumers are shopping around for coverage hit a record low as the rate at which those who did shop ended up switching carriers hit a record high, according to an annual J.D. Power and Associates survey released Monday.

The seventh year of the U.S. Insurance Shopping Study found that 23 percent of the 16,900 consumers surveyed in January 2013 said that they had shopped for auto insurance in the past 12 months, while 45 percent of those shoppers said they ended up switching insurers.

In last year’s survey, 25 percent of respondents said they had looked around for auto insurance in the past year, a record low at the time (the rate was 33 percent the year before that). At the same time, 43 percent of those consumers who shopped around ended up switching insurers, which was then a record high rate since J.D. Power began measuring retention in its survey.

“This industry has witnessed fewer customers shopping, but those who are shopping are serious about switching insurers,” Jeremy Bowler, J.D. Power’s senior director of the global insurance practice, said in a statement.

Auto insurance shoppers prioritize cost when looking around for a new policy, Bowler said. He also said that auto insurers face a “very competitive market” where customer retention rates are higher than in other industries.

“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,” he said.

Survey Highlights Internet’s Growing Importance

The survey also found that insurers’ websites are gaining influence on consumers’ shopping and buying habits.

Although local agents have stayed “as influential as in previous years,” there were changes in the survey’s findings on call centers and the Internet.

For those selecting a new carrier, 24 percent of respondents said that an insurer’s website was a decisive factor in their buying process (up from 22 percent last year) and 20 percent said so about call center representatives (down from 22 percent last year).

Bowler said that consumers visiting insurers’ websites expect a “quality and effective” experience that is strong across a range of devices, from desktops to tablets to smartphones.

According to Bowler, being able to easily get quotes, and sometimes complete a purchase, from a website without talking to an agent or call center is crucial to insurers that are trying to gain a stronger foothold in the changing marketplace.

“If [customers are] not able to get that from one insurer’s website, they will quickly move to the next insurer’s site,” Bowler said.

The quality of insurers’ online self-service capabilities can often determine whether or not a consumer revisits their website and is the “battleground” for the auto insurance industry, according to a report released last year from Customer Respect Group.

More recently, Accenture released a consumer survey that found that, while consumers rely on agents when buying coverage, they shop for coverage using websites. Also, the survey found that about 1 out of every 10 consumers who were surveyed between the ages of 18 and 24 years old said they would get quotes from a mobile application.

Erie Tops Satisfaction Rankings

The average score for all insurers in the shopping study was 828 out of 1,000, the third straight year for that industry-wide average score. In 2008, the average score was 858.

The following auto insurers scored at or above that average:
–Erie (854)
–Ameriprise (846)
–Amica Mutual (845)
–Liberty Mutual (845)
–State Farm (843)
–American Family (841)
–The Hartford (840)
–Esurance (834)
–Farmers (831)
–Safeco (831)
–Nationwide (830)
–Allstate (828)

The top five spots are different from last year, when insurers leading the ranking were The Hartford (857), Liberty Mutual (850), American Family (845), Auto Club Group (842) and Nationwide (841).

This year, the following auto insurers scored below the average score of 828:
–Auto-Owners (827)
–Automobile Club Group (826)
–Automobile Club of Southern California (823)
–MetLife (822)
–GEICO (817)
–21st Century (812)
–Progressive (810)
–GMAC (809)
–Allied (808)
–Mercury (806)
–Travelers (805)
–AAA NCNU (799)

USAA scored an 891 but wasn’t included in overall rankings because the insurer provides coverage specifically to members of the military and their families.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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