Auto insurance premiums are rising, while customer satisfaction is stagnant.
According to the most recent J.D. Power 2023 U.S. Insurance Shopping Study, the nation’s auto insurers are in a cycle of inflation, rising premiums, and increasing customer defection rates.
According to the survey, there is a growing interest in usage-based insurance (UBI) plans, with more buyers looking for plans that meet their needs and budget, which might have a long-term impact on carriers that have been attempting to establish lifetime value through bundling and other activities. According to a news statement from J.D. Power.
“Auto insurance customers are starting to shop for insurance like they shop for gas,” says Stephen Crewdson, senior director of insurance business intelligence at J.D. Power. They are becoming considerably more proactive in their search for programs that meet their demands and budgets.”
According to the report, the average overall satisfaction among auto insurance shoppers is 861, which is unchanged from a year earlier, despite the fact that shopping and switching rates have increased during the same time period.
The 30-day average shopping rate in March 2023 was 13.1%, the highest rate since June 2021 and significantly higher than the 2021 average of 11.4%.
In March 2023, the 30-day average transfer rate was 4.1%, up from 3.4% in all of 2021.
The increased emphasis on saving money as auto insurance premiums grew 14.5% in February 2023, more than twice the rate of inflation (6%), resulting in auto insurance accounting for a constantly increasing share of consumer discretionary spending.
According to the survey, UBI programs, which utilize telematics software to monitor a customer’s driving behavior and assign rates based on safety and mileage measures, are currently available to 22% of insurance shoppers and are purchased 16% of the time.
In 2020, the offer rate was 16% and the buy rate was 12%. Customer satisfaction increased by 6 points when carriers introduced UBI.
Progressive gained market share as GEICO slowed, rising rates well above the industry average for much of the second half of 2022.
Progressive, on the other hand, boosted rates in the first quarter of 2022 before registering lower-than-average hikes in the second half of the year.
During the same time period, Progressive increased its market share significantly, passing GEICO to become the second-largest auto insurer in the United States, trailing only State Farm.
State Farm had the highest score of 877 in the J.D. Power research among large auto insurers for offering a good purchasing experience for the third straight year. Liberty Mutual came in second (865) and Nationwide came in third (861).
For the second year in a row, The Hartford placed first among midsize vehicle insurers, with a score of 887. Erie Insurance (878) came in second, followed by the Automobile Club of Southern California (AAA) (870).