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2018 U.S. Insurance Shopping Study: Auto Insurers Double Down on Ads and Digital Investment as Shopping Stagnates

2018 U.S. Insurance Shopping Study: Auto Insurers Double Down on Ads and Digital Investment as Shopping Stagnates

By Joseph Dobrian, April 26, 2018
Auto insurers are leaning on publicity and increased electronics-based convenience to woo customers in a highly competitive field. Levels of service and pricing have become more similar, one brand to another, so insurers are investing heavily in new digital capabilities to expedite the insurance shopping process, as well as in awareness-building through various national advertising campaigns.

The just-published J.D. Power 2018 U.S. Insurance Shopping StudySM reveals that insurance shopper volume is at an historical low, and that insurers must rely on their reputations, above all, to lure new customers and retain old ones.

“We’re entering an era of consumer-centric insurance that will likely be marked by a surge in new digital offerings and serious efforts by insurers to improve the auto insurance shopping experience,” said Tom Super, director of the Property and Casualty Insurance practice at J.D. Power. “Auto insurers looking to differentiate and win new customers are making big bets with digital—such as in personalization—that meet customers’ growing expectations for improved interactions.”

Reputation Is Top Driver
The 2018 study shows that brand reputation is the factor most likely to drive customer consideration of an insurer. It contributes 29%, on average, of what influences an insurance shopper to research an insurer’s offerings. This may explain why the top 10 insurers, in terms of total market share, now write 72% of all business in the country, up from 64% in 2000.

The study also suggests that a strong value proposition remains essential in driving quote and close rates—but customers may not be aware of all their alternatives, some of which might add surprising value. “Insurtech” companies—those that employ the latest technologies to offer ultra-customized policies and use data from Internet-enabled devices to dynamically price a customer’s premiums according to observed behavior— have raised more than $7.1 billion globally since 2012, though the level of awareness of alternative insurance models is still relatively low among insurance shoppers. Just 6% of prospective customers indicate being aware of at least one of the following companies: Lemonade, Metromile, Trov, and Sure. Less than half of shoppers who are aware of a given provider would consider doing business with them in the future, according to the study.

The study also suggests that direct-to-customer vendors retain an advantage. Overall satisfaction among shoppers who purchased insurance from companies that primarily sell directly to the customer is 846 (on a 1,000-point scale), compared with a score of 842 among shoppers who purchased insurance from companies that primarily sell through independent agents, and 834 among those who bought from insurers who primarily sell through exclusive agents. The study finds that delivering a consistent omnichannel experience is critical. Among auto insurance shoppers, 45% use multiple channels when purchasing a policy.

Erie Leads the Pack
Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience, with a score of 877. This marks the sixth consecutive year Erie Insurance has ranked highest in the study. Auto-Owners Insurance ranks second (870), and American Family ranks third (860).

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

  • Educate yourself on the evolution of insurance-related technology. Some insurers can offer highly customized policies, based on information gleaned from the Internet.
  • Look not only for the most cost-effective premiums and policies, but for insurers who have the best reputation for paying claims and not being too eager to raise rates.
  • Look for customer testimonials—but be aware that unhappy customers are much more likely than happy customers to publish online reviews.

About the Study
Now in its 12th 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 15,000 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 2017 and January 2018.

Additional Research:

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