Nearly half of auto insurance customers have shopped around for new policies during the coronavirus pandemic, but few cared about specific brands, according to the J.D. Power 2021 U.S. Insurance Shopping Study.
Among the 46 percent who made changes, 17 percent reduced coverage and 15 percent shopped for another carrier entirely, the survey found. Approximately 12 percent went for an increased deductible or switching to another carrier.
Interestingly, J.D. Power found a 6 percentage-point increase in shopping activity from customers who had a pandemic-related change in their financial circumstances. Behind that number: a pandemic-driven 55 percent decrease in the average number of miles driven and a record 15 percent unemployment rate at the start of the COVID-19 pandemic in early 2020.
“The pandemic has revealed a lot about insurance shopping behaviors in 2020, as there was a significant surge in shopping activity among customers who were financially affected and many gravitated to big, well-known brands and offers for lower rates,” Tom Super, head of property & casualty insurance at J.D. Power, said in prepared remarks.
Super said the results underscore the need for insurers to obtain more sophisticated acquisition and retention tools to help set themselves apart.
“Ironically, while the industry’s estimated annual ad spend now nears $10 billion, consumers say they see less differentiation among the top brands,” Super said. “Following a period of massive disruption and a prolonged, uneven recovery, auto insurance customers have a heightened expectation about factors such as price, flexibility and coverages. Insurers need to get more creative around customer service and delivery because the current incremental changes are missing the mark.”
About 54 percent of auto insurance customers took no action to manage their insurance costs during the pandemic, J.D. Power said.
Here are additional result highlights:
- Approximately 43 percent of shoppers were not aware of their insurer making any changes because of the pandemic, even as the auto insurance industry returned a record $18 billion in auto insurance premiums to customers who drove less miles due to pandemic quarantines.
- The top five insurers in terms of total premiums handle 60 percent of all auto insurance premiums, up from 44 percent 20 years ago. That number increased 3 percent in 2020. The reason: unaided brand awareness despite $10 billion in consumer advertising.
- Liberty Mutual and State Farm ranked highest among large auto insurers in terms of providing a satisfying purchase experience, scoring 872 out of 1,000, just above the segment average of 871.
- American Family is the high scorer among midsize auto insurers at 899, while Amica Mutual is second at 891. Erie Insurance placed third at 882. For this segment, the average score is 858.
Source: J.D. Power