Monthly Memo- May: Poor Service, Not Price Drives Auto Insurance Customers to Shop

Poor Service, Not Price Drives Auto Insurance Customers to Shop

While a poor experience with their insurer is the leading reason customers shop for, and ultimately switch to a new auto insurance company, declining new price satisfaction is the primary reason customers are less satisfied when they do switch insurers, according to the J.D. Power 2014 U.S. Insurance Shopping StudySM released April 2014.

The study finds that 30 percent of auto customers shopped for a new insurance provider in 2013, among whom 36 percent ultimately switched insurers. Increases in premiums do not drive shopping as much as poor experience. Customers who experience a premium increase shop at a rate of 13 percent—less than half the rate of shopping among those who have a poor experience (28%).

Price, however, is still important in the selection process—eight in 10 customers continue to select the lowest-priced insurer—and an increasingly important driver of new-buyer purchase experience satisfaction once customers have selected a new insurer. Overall new-buyer satisfaction with the auto insurance purchase experience averages 821 (on a 1,000-point scale), down significantly from 828 in 2013. The decline in satisfaction is driven by a 17-point drop in the price factor, which has the greatest impact on satisfaction.

“The insurance industry spends billions of dollars each year on advertising, and over the last seven years many of those ads have tried to entice customers with big savings,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power. “While switching to a new insurer usually results in savings, the ads make promises of savings that a growing number of new customers don’t believe they’ve received.”

Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience for the second consecutive year, with a score of 843. Erie Insurance performs particularly well in all three factors. MetLife and State Farm rank second in a tie at 839, while American Family and Ameriprise rank fourth in a tie at 835.

The 2014 U.S. Insurance Shopping Study is based on responses from more than 16,900 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. The study was fielded in July 2013, October 2013 and January 2014.

Article by Insurance Information Institute-


More people are biking than ever; indeed from 2000 to 2011, the number of bicycle commuters in the U.S. grew by more than 47 percent. We’re celebrating Bike Month with a reminder to ride safely and make sure you and your bicycle are properly covered. More info at #BikeMonth.

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One Response to Monthly Memo- May: Poor Service, Not Price Drives Auto Insurance Customers to Shop

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