Auto policy switch rates set new monthly record in Q3
J.D. Power predicts policy shopping rates could continue to grow in Q4.
After seeing a new record high rate in Q2 2024, the third quarter of 2024 began with a large drop in auto policy shopping in July. However, policy shopping rebounded in August and September, with September hitting a new monthly high shopping rate of 13.8%, according to J.D. Power’s Q3 2024 LIST Report.
Overall, the policy shopping rate dropped slightly from 13.3% in Q2 to 13.2% in Q3, but J.D. Power predicts this rate in Q4 could be as high as 13.8%, largely driven by customers searching for lower premiums.
The rate of those actually switching their auto policy rose to 4.6% in August, which is also a new monthly high in the history of the LIST Report. Overall, the switch rate for Q3 increased to 4.2%, compared to 3.9% in Q2. This also marked a new quarterly high for switching policies, the report notes.
Regionally, those in the southeast policy shopped the most in Q3 with a rate of 14.4%, with those in the northeast shopping the least at 11%.
The report states that the fourth quarter of each year is generally slower for auto policy shopping, but this year could continue to see increased rates of policy shopping in Q4.
Property insurance also saw a higher volume of shopping through the summer, with July peaking at a 9% increase in shopping year-over-year.
In the LIST Report, J.D. Power found that a “mismatch” between the miles traveled by vehicles and the lagging issuance of violations has dampened profitability efforts in the auto sector. Hurdles for insurers in this sector include the adoption of automatic traffic enforcement which limits the use of this information for rating and underwriting purposes, as well as poor record management of violation information for drivers who move to another state.
Among customers who bundle their home and auto with the same carrier, often called “Robinsons,” around 5% said in September that they planned to switch carriers in the next 90 days, with another 31% saying they would “maybe” switch. Of those who planned to switch, 29% stated high premiums had driven them to shop, with the average annual premium for these folks being $4,520.
In Q3, the carriers that saw the highest levels of customer loyalty were NJM Insurance, Erie Insurance, CSAA, Amica and ACSC. On the flip side, the carriers J.D. Power found to have the lowest levels of loyalty in Q3 were Nationwide, SafeCo, Auto-Owners, Farmers and Allstate.