Filed Under:Markets, Personal Lines

J.D. Power Finds Majority Get Auto Insurance Quote Online

UPDATED: 3:40 p.m. EDT

NU Online News Service, June 2, 12:40 p.m. EDT

The majority of first time auto insurance buyers now turn to the internet for a quote, bypassing traditional local agents or call centers, a J.D. Power and Associates report says.

The Westlake Village, Calif.-based marketing information services company says that for the first time more than half of insurance buyers say they get their quote online.

In its 2011 U.S. Insurance Shopping Study, a total of 54 percent of shoppers turn to the internet first for a quote, but most still purchase their insurance either through call centers or independent agents.

J.D. Power says that the results underscore the fact that over the past five years that the study has taken place, the importance of an insurer’s website “in generating new business among new buyers has been steadily increasing…at the expense of more traditional local agency or call center sales channels.”

“This transition to websites as the dominant lead-generation channel is an important shift for insurers to recognize and address in their marketing and sales strategies,” says Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates in a statement. “While nearly one-half of all accepted web quotes are closed by either an agent or call center representative, customers are clearly more often looking to insurers’ sites or third-party sites in the early stages of the shopping process, and this behavior is blurring the lines of how we traditionally think about the discrete sales channels.”

The survey also indicates that over the past five years agents have seen their share of insurance purchased through them erode slightly. In 2007, 57 percent of buyers purchased insurance through an agent. By 2011 that figure dropped to 52 percent. Buying through a call center also deteriorated, going from 22 percent in 2007 to 20 percent in 2011.

On the other hand, purchases over the web increased from 22 percent in 2007 to 28 percent.

More buyers appear to be willing to shop around for a new policy each year, according to the survey results, with an average of 33 percent shopping compared to 30 percent last year and 27 percent in 2009. Of those who shopped, 40 percent switched to a new insurer, up from 33 percent last year.

Bowler noted that insurers spent $5 billion in marketing and advertising last year, $2.6 billion of that among the top four insurers. While this may have contributed to customer shopping, most do so because of a life event or because they want a better deal. However, he notes that “no group is more interested in switching than customers who are displeased with the service provided by their incumbent insurance company.”

Jeff Yates, executive director of the Agents Council for Technology (ACT) says the report underscores the opportunities for independent agents today.

“This is a great time for agents to focus on personal lines as a business strategy and not as an accommodation. They have to see this as a profit center,” he says.

Agents using social networking find their agency high-up on the search list, and with the added ability to produce multiple quotes for clients, they can offer more of an advantage to potential customers tired of the tedium of re-keying information at multiple websites.

“Customers are already there,” says Yates. “They are already doing it. If the agents can get that kind of multiple company capability up and online, and customers realize it, I think they have some great potential.”

When it comes to an examination of customer satisfaction with insurers American Family Insurance had the best score at 864 on a 1,000 point scale.  Rounding out the top three are Auto-Owners Insurance with a score of 860 and Erie Insurance with a score of 857.

USAA, which provides coverage to only U.S. military personnel and their families, had the highest overall score of 906. The company is not included in the report because it is not open to the public.

In a statement, Jack Salzwedel, president for Madison, Wis.-based American Family says, “The credit here goes to our agents and employees. There are a lot of companies who say they want to focus on customers and put the words down on paper. But there are very few that actually have it as part of their fabric and culture, and really believe it.”

This story was updated at 3:40 p.m. EDT with comments from Jeff Yates.

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