J.D. Power: Auto policy shopping, switching up in Q4 2022
Increasing cost pressure has led insurers to slow ad spend in an attempt to remain profitable.
Auto insurance shopping was up to 12.1% across all regions of the United States in the fourth quarter of 2022, according to J.D. Power’s latest shopping LIST report. The rate of customers who have actually jumped ship to a new auto insurance carrier in Q4 was 4.1% — up from 3.8% in Q3 2022, and 3.5% a year prior in Q4 2021.
The rate of usage based insurance (UBI) adoption plateaued toward the end of 2022 after a jump in telematics participation at the beginning of the year, according to a survey from TransUnion. Around 60% of customers who were offered UBI options opted in, but more than 40% of those consumers surveyed said they still experienced rate increases, which could have contributed to the leveling of the telematics trend.
“The value proposition of telematics is that consumers give up some sense of privacy or autonomy to provide insurers a demonstrably safe driving record in real-time,” Michelle Jackson, senior director of personal lines market strategy at TransUnion is quoted in J.D. Power’s report. “If they’re not seeing that translate into lower rates, or if their rates actually increase, some may not continue with the program.”
Cost pressure on insurers has risen alongside premiums and loss costs, and J.D. Power reports this has led to a decrease in ad spend – after over two decades of growth – as insurers attempt to slow unprofitable business. The decrease in ad spend also causes trouble for the increasing number of auto policy shoppers, as it may make it harder for them to find carriers interested in their business.