A study of auto insurance customer satisfaction that ranked Eriefirst among 18 major carriers has found the number of consumersbuying direct from insurers and switching companies hasincreased.

The data was contained in the J.D. Power and Associates 2008Insurance New Buyer Study that was released today by the WestlakeVillage, Calif.-based marketing information services firm.

Other insurers in the top five after Erie, Pa.-based Erie were,in order, Hartford, Conn.-based The Hartford; State Farm,Bloomington, Ill.; Liberty Mutual, Boston; and American Family,Madison, Wis.

J.D. Power said its study examined the purchase behaviors andoverall satisfaction of buyers who shop for a new auto insurancecompany with three key factors measured to determine overallsatisfaction.

The company said key factors in order of importance are:distribution channel (50 percent), price (29 percent) and policyofferings (21 percent).

Erie came in first with a score of 896 on a 1,000-point scale,performing particularly well in the price factor. Scores for theother top five were: Hartford (894), State Farm (893), LibertyMutual (886) and American Family (880).

Others that performed at or above the industry average of 867were: GEICO (876), Nationwide (875), MetLife (873) and AutomobileClub Group (876).

Ranked below average were: Allstate (863), Esurance (860),Safeco (855), Travelers (855), Farmers (849), Progressive (844),American International Group (840), Mercury (836) and AutomobileClub of Southern California (808).

As it has in the past, USAA, which is unranked because it limitssales to U.S. Military and their families, scored highest at922.

J.D. Power noted that State Farm performed particularly well inboth the distribution channel and policy offerings factors.

The study found that while 55 percent of all new auto insurancesales are handled by local agents, the percentage of buyersshopping and closing via direct channels--which includes insurerWeb sites and call centers--has increased from 2007.

In 2008, 44 percent of buyers who bought auto insurance from anew insurer purchased directly from the insurer, rather thanthrough an agent--an increase of 3 percentage points.

Among buyers who changed their shopping channel, more buyerschanged to direct purchasing methods (22 percent) compared withthose who switched to using an agent (15 percent).

The study found that in 2008, sales transactions processedentirely on the Web accounted for 21 percent of all new-customerinsurance sales.

Jeremy Bowler, senior director of the insurance practice at J.D.Power and Associates, said in a statement,"The shopping experienceis the first opportunity that an insurer has to meet or exceed theexpectations of prospective buyers. The growing convenience ofobtaining quotes, particularly online, makes shopping and switchingincreasingly simple.

"As a result, insurers who disappoint buyers during the shoppingand sales process run the risk of losing sales from potential newcustomers and of losing renewals from existing customers."

The good news for agents from the study was the finding thatbuyers who purchase their auto insurance policies through localagents give significantly higher average satisfaction scorescompared with those who purchase policies from call centerrepresentatives or via Internet channels.

"Buyers who use insurance agents are also more likely topurchase bundled auto and homeowner insurance policies" said Mr.Bowler.

But, he noted, "Despite this trend, insurance providers aresteadily enhancing their Web sites capabilities, and shoppingthrough a direct channel certainly has its benefits for prospectivebuyers, as most cite the ease of conducting business as a primaryreason for shopping and purchasing direct.

"As direct channels are steadily enhanced, the challenge forinsurers is to accommodate buyers seeking more complex insurancebundles in order to potentially increase close rates via theWeb."

The rate of switching insurers has increased--up from 33 percentin 2007 to 39 percent in 2008, the study reported.

Mr. Bowler said in an interview that price is a major reason forswitching that has increased markedly as the economy hasslowed.

He said 74 percent of everyone who shopped indicated price wasamong their reasons, and 46 percent said their "number one reason"for shopping was price. The latter figure, said Mr. Bowler, is an 8percent increase from 2007, when the number was 38 percent.

He said there was also an impact from heavy insurer advertisingwith a message that it is "so easy to switch."

Fourteen percent of customers initiated the shopping processbecause of a poor customer service experience. Among them, 73percent switched insurers, which emphasizes the importance ofdelivering good customer service, according to the study.

In the past 12 months, 36 percent of customers requested aninsurance quote, marking a 5 percent increase from 2007.

Serial shoppers, defined as those customers who have shoppedthree or more times for auto insurance in the past three years,represent slightly less than one-third of all auto policyshoppers.

J.D. Power said its study results were based on responses from8,452 consumers who requested an auto insurance price quote from atleast one competitive insurer in the past 12 months and includesevaluations of 17,677 unique carrier quotes. The study was fieldedin April 2008.