2015 U.S. Insurance Shopping Study Results
By Jeff Youngs,
Although many customers are shopping for a new auto insurer in reaction to rising rates, few of them are actually switching insurers, according to the J.D. Power 2015 U.S. Insurance Shopping Study.SM
The study, now in its ninth year, measures auto insurance shopping and purchase behavior as well as purchase experience satisfaction among customers who recently purchased insurance. Three factors (in order of importance) are considered: price, distribution channel, and policy offerings.
Close Rate, Brand Awareness Decline
This year's study finds that with increased shopping, but decreased switching of insurers, the insurer's close rate--the ability to convert a prospective shopper from quoting to closing--decreases to 13% in 2015 from 18% in 2014. Despite the industry increasing its advertising spend by 6% in 2015 compared with 2014,1 brand awareness of insurance providers among their prospective customers shows a decline--to 60% in 2015 compared with 62% in 2014.
The study also finds that more customers are shopping for a new insurer--39% in 2014 compared with 32% in 2013--but fewer are actually switching. According to the study, 29% actually switched insurers in 2014, compared with 37% in 2013.2
"Customers are being pushed into the market due to rate increases, but unless they can find a policy that will save them money, they're not switching providers," said Valerie Monet, director of the insurance practice at J.D. Power. "In fact, many of those customers can't find a better deal and ultimately don't switch insurers."
Auto insurers increased rates by an average of 2.1% nationwide in 2014, following an increase of 2.5% in 2013.3 Shoppers who switched insurers indicate an average premium savings of $388 in 2015 compared with $340 in 2014 and $351 in 2013.Satisfaction with the purchase experience among customers who recently switched insurers improves by 12 points year over year to 833 (on a 1,000-point scale) in 2015. A 13-point improvement in the price factor--the leading driver of customer satisfaction with the purchase experience--is the primary driver of higher overall satisfaction in 2015.
Examining satisfaction scores from no savings up to $250 or greater, with each $50 increase in savings, satisfaction with price increases by approximately 25 points, on average.
"Customers who shop and do find a better deal will likely switch insurers, and increasing satisfaction scores among customers who recently switched suggests that those customers are pleased with the price they receive," Monet said.
Monet notes that while price is the most tangible aspect of a policy for consumers to focus on during the shopping process, other factors are critical to a positive experience.
"When looking exclusively at price, consumers may find the grass is not always greener," Monet said. "Many customers are obtaining quotes and gathering information on insurer websites or through aggregators, but the day-to-day interactions they have with their insurer, especially if they have to file a claim, will be the ultimate moment of truth for the customer."
Erie, Ameriprise, The Hartford Rank Highest
Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience for a third consecutive year, with a score of 870, up from 843 in 2014. Erie Insurance performs particularly well in all three factors and improves significantly in the price and distribution channel factors. Ameriprise and The Hartford tie for second at 869, while CSAA Insurance Group ranks fourth (861), and Amica Mutual ranks fifth (850).
Based on the study, J.D. Power offers the following consumer tips:
- Look for insurers that provide clear, effective communication about policy options throughout the shopping experience--whether through interactions with staff or through tools and information on their website.
- This information should include guidance in the selection of a policy that meets their needs as well as any discounts the customer may be eligible to receive.
- Find out on the website or ask your agent how your premium is to be calculated. Ask what you can do to lower your premium.
About the Study
The 2015 U.S. Insurance Shopping Study is based on responses from more than 15,600 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past nine months. It includes more than 50,000 unique customer evaluations of insurers. The study was fielded in May, July, and October 2014, and January 2015.
1 Dowling & Partners, LLC.
2 The 2013 annualized shopping rate has been recalculated so that is its comparable with the 2014 and 2015 study-year data, which are weighted to reflect U.S. age distribution based on estimates from the U.S. Census.
3 SNL Financial