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 StudySM 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 providers--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 insurers. 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 obtain 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).
This year's report management discussion is available for download, please click here. The management discussion examines the role of the Web in consumer shopping behavior, and highlights the strategic choices available to insurers as they strive to adapt their traditional sales models to better align with rapidly evolving customer preferences.
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.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. 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.