The nation’s auto insurers are caught in a cycle of escalating premiums, high inflation, and an increase in defection, J.D. Power’s 2023 U.S. Insurance Shopping Study revealed. The study shows that auto shoppers have a heightened focus on cost-cutting measures when looking for new policies or potentially switching to new carriers.
According to Stephen Crewdson, senior director of insurance business intelligence at J.D. Power, “Auto insurance customers are starting to shop for insurance like they shop for gas.” Adding, “They are searching for plans that suit their needs and budgets more proactively, which could significantly impact carriers trying to increase lifetime value through bundling and other activities for years. This shopping tendency may soon show itself as a rise in customer interest in usage-based insurance (UBI) policies and a possible reallocation of market share among the leading carriers.”
Here are this year’s key findings:
- Auto insurance shopping increases while customer satisfaction stagnates:
- Average overall satisfaction among auto insurance shoppers is 861 on a 1,000-point scale, down from a year ago.
- Price hikes spur new-policy shopping rates:
- Auto insurance costs rose 14.5% in February 2023, more than twice the 6% inflation rate, making auto insurance account for a steadily increasing share of consumer discretionary spending.
- UBI starts to go mainstream:
- UBI programs, which use telematics software to monitor a customer’s driving style and assign rates based on safety and mileage metrics, are now offered to 22% of insurance shoppers and are purchased 18% of the time. Up from a 16% offer rate and a 12% purchase rate in 2020.
- Progressive gains market share as GEICO slows:
- GEICO raised its rates significantly above the industry average throughout much of the second half of 2022, while Progressive raised rates in the first quarter of 2022 and then registered lower-than-average increases during the second half of the year.