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2017 U.S. Insurance Shopping Study: Facing Modest Rate Increases, Auto Insurers Increase Reliance on Service, Agents

2017 U.S. Insurance Shopping Study: Facing Modest Rate Increases, Auto Insurers Increase Reliance on Service, Agents

By Joseph Dobrian, May 01, 2017

The ability of an automotive insurance provider to explain their coverage and other services—and differentiate itself from its competitors—is becoming more important. Due to stagnant auto insurance shopping activity and modest rate increases, these insurers have come to rely more and more on their level of customer service, personalized advice, and knowledgeable agents to gain new customers and retain old ones, according to the J.D. Power 2017 U.S. Insurance Shopping Study.SM



J.D. Power research shows that average premiums on automotive insurance policies have been increasing by 2-3% annually, over recent years. Meanwhile, new insurance shopping rates and new customer acquisition rates are flat, and auto insurers are facing the challenges of resisting commoditization of their product—and the public perception that auto insurance is indeed a commodity. According to the study, as auto insurers struggle to compete on price, they are being forced to differentiate based on factors such as brand reputation, agent recommendations, product, and service to drive new business sales.

2017 U.S. Insurance Shopping StudyThe study shows that the key performance indicator (KPI) that has the greatest influence on customer satisfaction is ensuring that customers completely understand their coverage.

“The auto insurance industry is at an inflection point where customer patterns and behaviors are on the verge of shifting,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. “To survive this period of price stagnation, insurers must develop strategies to be able to better differentiate not just to acquire new customers, but also to acquire customers with desirable risk profiles in order to maintain profitability.”

Key findings of the 2017 study include:

  • Stagnation of the auto insurance market: Shopping activity started to slow in 2016, and that trend shows up again in this year’s study. The total number of insurance shoppers is largely unchanged from the last year, while average premium rates have increased by 2-3%. Customer acquisition rates and new quote volume are flat.
  • Price has become a more influential factor in brand consideration and quoting. The influence of price on a shopper’s decision to consider and quote a brand has increased by five percentage points in each of the past two years. As a result, the importance of price has surpassed the importance of a good past service experience when a shopper considers or quotes a brand.
  • Agents remain key. Agent recommendations have become an increasingly important driver of customer consideration and quote generation. Compared with 2015, shoppers increasingly rely on agent recommendations when considering insurers (10 percentage points higher than in 2015) and quoting insurers (nine percentage points higher).
  • Communication drives satisfaction: The KPIs that affect the purchase experience index the most are: ensuring the customer completely understands coverage; providing guidance and/or tools for selecting the right coverage; ensuring customers understand premium calculations.

Erie Insurance Ranks Highest for Fifth Consecutive Year

Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience, with a score of 879 out of a possible 1,000 points. This marks the fifth consecutive year Erie Insurance has ranked highest in the study. American Family ranks second (869), followed by The Hartford (861), Automobile Club Group (852), and Amica Mutual (850).

Consumer Tips

Based on the study, J.D. Power offers the following consumer tips:

  • Look for an insurance agent with a reputation for integrity and trustworthiness, who can give you thorough advice on the pluses and minuses of various insurers and their products.
  • Compare the terms of various policies and assess how those policies might be affected by factors such as current events, driver performance, and acquisition of new vehicles.
  • Be sure you’re well covered in areas where you most need coverage (such as personal liability), but don’t buy more insurance than you need (such as collision or theft insurance for an old car that’s in disrepair).

About the Study

Now in its 11th year, the U.S. Insurance Shopping Study measures auto insurance shopping, purchase behavior, and purchase experience satisfaction among customers who recently purchased insurance. Satisfaction is measured in three factors (in order of importance): price, distribution channel, and policy offerings.

The study is based on responses from more than 16,400 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past nine months and includes more than 50,000 unique customer evaluations of insurers. The study was fielded in April, July, and October 2016 and January 2017.


Additional Research:


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