Fewer drivers are shopping around for auto insurance but when they do they’re more likely to switch to a new company.
The percentage of auto insurance shoppers is at a six-year low even as the percentage of those choosing a new company is at a six-year high.
According to a 2013 Insurance Shopping Study by J.D. Power and Associates, of the 23 percent of customers who shopped auto insurance in the past 12 months, 45 percent ultimately switched insurers—the highest rate since the study first began measuring insurance customer retention in 2008.
By comparison, the proportion of insurance customers who shop decreased from a high of 33 percent in 2011, while the switching rate among shoppers has steadily increased from a low of 33 percent in 2010.
The decrease in shopping behavior comes at a time when overall customer satisfaction with auto insurance companies has improved to an all-time high of 804 (on a 1,000-point scale) in 2012. Overall new-buyer satisfaction with the auto insurance shopping experience averages 828 for the third consecutive year, 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,” Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates, said in a statement. “With customer satisfaction generally high and climbing, this industry has witnessed fewer customers shopping, but those who are shopping are serious about switching insurers.”
Insurance shoppers are very cost-sensitive, and their satisfaction is less influenced by how they purchase their policy—from a local agent, a call center or online—placing more importance on price in their purchase experience when selecting a new insurer.
“Insurance companies need to be creative in order to differentiate themselves in this very competitive market,” Bowler said. “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.”
The study found that the importance of the insurer website in the new-buyer purchase experience has increased to 24 percent in 2013, up from 22 percent in 2012. The call center representative is less influential among customers selecting a new insurer in 2013 (20 percent), compared with 2012 (22 percent), while the local agent remains as influential as in previous years.
“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 said. “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.”
