Auto customers shopping for policies ‘like they shop for gas’
The latest report from J.D. Power shows auto insurance shopping is up YoY – driven by increasing premiums.
Auto insurance satisfaction rates remain unchanged from a year ago, but more customers are shopping for coverage, says the recently released J.D. Power 2023 U.S. Insurance Shopping Study. The 30-day average shopping rate for March 2023 was 13.1%, which is the highest rate since June 2021. The switch-rate for March trended similarly, with a 30-day average rate of 4.1% compared to the 3.4% average in 2021.
Price seems to be the biggest driver behind auto insurance shopping, with auto rates increasing 14.5% in February 2023, J.D. Power reports. Among those customers who are shopping for policies due to the cost of premiums, 44% say they are price-checking and 42% say they were led to shop by a rate increase. Additionally, 41% of customers who said a premium increase led them to shop reported their rate had jumped by at least 20%.
“Auto insurance customers are starting to shop for insurance like they shop for gas,” Stephen Crewdson, senior director, insurance business intelligence at J.D. Power, said in a release. “They are taking a much more active stance in seeking out plans that fit their needs and their budgets, which could have a serious long-term effect on carriers that have been working for years to build lifetime value through bundling and other initiatives. In the near term, this shopping trend manifests itself in increased customer interest in usage-based insurance (UBI) plans and some reshuffling of market share among the top carriers.”
Telematics software has become a popular option for those looking to save money on their auto premiums, and UBI programs are becoming a more common offering across carriers. According to J.D. Power’s report, UBI programs are now offered to 22% of those shopping for insurance, and are purchased 18% of the time. This shows an increase from 2020, when the offer rate was 16% and the programs were purchased 12% of the time.