Drivers are shopping and switching auto insurance policies more than ever before, says a new white paper from LexisNexis Risk Solutions.
The Insurance Shopology white paper, which analyzes shopping behavior in the U.S. auto insurance market, reveals that 40 percent of policyholders shopped for auto insurance in the past year and 78 percent have shopped their insurance in the last five years. LexisNexis Risk Solutions credited the increased shopping activity in large part to how easy it is to shop for insurance using carriers’ price comparison tools, mobile apps and websites that pre-fill consumer data.
The study divided respondents into three categories:
- Recent Non-Shoppers—consumers who had not shopped for auto insurance in the past year.
- Shoppers—those who had shopped for auto insurance in the past year.
- Switchers—consumers who had shopped their auto insurance and actually switched carriers in the past year.
While consumers might choose to shop around for a variety of reasons, the study says the decision to switch insurers comes down to one thing: price. And savings don’t just appeal to lower-income earners―respondents earning between $100,000 and $150,000 indicated their willingness to switch carriers to save $100 or less. In fact, 45 percent of all respondents who switched carriers in the last year did so for a savings of $100 or less.
However, though price was found to be the key motivator for consumers looking to switch providers, the white paper says insurers can help retain current customers by proactively monitoring and anticipating their upcoming life events.
More than 60 percent of Shoppers experienced a life event within the past year, and half of them claim it affected their decision to shop for auto insurance. In addition, 65 percent of consumers expect a life event to occur within the next one to two years, with 60 percent of them indicating the event will influence their decision to shop for auto insurance again.
The life events that generally have the most influence on auto insurance shopping include: adding or removing a driver; buying or leasing a new vehicle; decreasing household income; buying a new house; getting married or divorced; and moving. The white paper says carriers that implement data-driven solutions to monitor and anticipate these key events can proactively engage customers at the right time and in the appropriate context to better accommodate their new or changing coverage needs. Offering a policy review, timed when consumers are considering their policy options, may also help customers feel valued and well represented, according to the study.
The analysis also notes some key differences in shopping behavior for Shoppers compared to Recent Non-Shoppers. Recent Non-Shoppers are more likely to renew their policies automatically, with 38 percent saying they renew immediately when they get their renewal notice and 27 percent saying they do so with little or no policy review. Meanwhile, the Shoppers studied are more likely to take their time, research their options and renew within 30 days of receiving their renewal notice. The vast majority of Shoppers (70 percent) said they review both their price and coverage before renewing.
About the Study
LexisNexis Risk Solutions commissioned a study of more than 2,000 current U.S. auto insurance consumers, aged between 25-70 years. Respondents were the primary decision makers and purchasers for auto insurance.