Shopping for car insurance, like many other types of shopping, has largely moved online, a new J.D. Power study finds, but it adds that while consumers shop for insurance online, many still make the actual purchase through an agent.
The study found that 74% of shoppers use insurer websites or aggregators for obtaining quotes and researching information. While nearly half of customers obtain a quote via insurer websites, only 25% actually purchase their policy online; 50% close through an agent and 22% phone a call center.
“While many customers want to shop online, they often still want to talk to someone when they buy their insurance to make sure they are getting the right coverage or have questions about their policy answered,” said Hoeg. “Insurers need to focus on the delicate balance of providing an easy shopping experience while providing product differentiation and professional service.”
Erie Insurance and Liberty Mutual tied for first place in providing a satisfying purchase experience, each with a score of 853. This marks the fourth consecutive year Erie Insurance has ranked highest in the study.
The Hartford ranks third (850); American Family fourth (845); and Automobile Club Group fifth (840).
Now in its 10th year, the J.D. Power U.S. Insurance Shopping Study measures auto insurance shopping, purchase behavior, and purchase experience satisfaction among customers who recently purchased insurance.
The study found that direct premiums written increased by approximately 4.7% to $199 billion in 2015, with much of that growth coming from new business generated by direct writers.
“Direct writers have invested heavily in digital channels to increase the functionality and ease of using their websites, which has clearly created an advantage for direct distribution relative to traditional agency distribution in some respects and has supported agency distribution in others,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power.
Hoeg said the challenge for insurance companies is that there are fewer consumers shopping around for insurance at the moment. Many companies have kept premiums flat or even lowered them, giving consumers fewer reasons to look for cheaper policies.
In addition, customers who do switch are saving an average of $356 on their annual premiums, less than the $388 in savings for those who switched in 2015.
“With more price competition and smaller savings, there simply is not as much motivation for most customers to switch,” said Hoeg. “Many policyholders see insurance as a price-differentiated commodity, and shoppers are opting to remain with their incumbent insurer as they find the savings offered by competitors is not as great as they had expected, or as much as they saved the last time they switched.”
The 2016 U.S. Insurance Shopping Study is based on responses from more than 17,000 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 9 months and includes more than 50,000 unique customer evaluations of insurers.