Shoppers More Willing To Switch Car Insurance: Study

May 4, 2012

Car ownership costs are going up, as we recently reported, including a 3.4 percent average increase in auto insurance. Now, a new study from J.D. Power and Associates shows that consumers shopping for car insurance are more willing to switch insurance providers based on competitive quotes.

The 2012 U.S. Insurance Shoppers Study just released reveals that while only 25 percent of insurance customers said they’d shopped for car insurance in the last 12 months, 43 percent of that segment switched insurance providers. This is the highest rate since J.D. Power and Associates began measuring customer retention since 2008.

More shoppers switching, but realizing lower typical savings

With overall car ownership costs continuing to rise, consumers feeling the pinch are turning to areas where they have some measure of control. Car insurance, being highly competitive, is one such household expense consumers are taking a closer look at. 

Jeremy Bowler, senior director of the company’s global insurance practice, tells FamilyCarGuide that “a majority of shoppers indicate price, or a change of circumstances, such as moving or a job change, as reasons for switching. However, those who shopped because their insurer gave them poor service tend to switch at the highest rate.”

Bowler added that study found that the average savings among switchers shrank somewhat compared to a year ago.  “"The increase in the proportion of shoppers actually switching suggests that fewer price-checkers are gathering quotes they are less likely to act upon, perhaps a direct result of the lower typical savings derived from switching, which has decreased from an average of $412 in 2010 to only $359 in the past 12 months.

When asked about the seeming contradiction of increased number of shoppers switching and the lower typical savings, Bowler explained, “Perhaps the serial shopper, those who shopped at each renewal, may have saved hundreds of dollars by switching once, and as a result, decided to shop again at their next renewal. However, these same shoppers would be less likely to see another $400 in savings.”

While the typical savings may have decreased, saving nearly $360 in annual car insurance premiums, on average, may still be an attractive inducement to switch insurers – especially cash-strapped families in multi-car households where every dollar counts.

Other key study findings

Gone are the days when consumers called up their agent as a first step in getting price quotes or asking questions related to their car insurance coverage. According to the 2012 U.S. Insurance Shoppers Study, 52 percent begin their shopping process online, and 73 percent visit at least one insurer’s website during their information-gathering process.

What’s even more revealing is that 32 percent obtained their quotes online only. Furthermore, 34 percent of recent shoppers that J.D. Power and Associates surveyed said they’d “most prefer to purchase their new policy online.”

The survey also ranked U.S. auto insurers according to customer satisfaction, with The Hartford coming in highest. Rounding out the top five are Liberty Mutual, American Family, Auto Club Group, and Nationwide.

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