With less than 3% of new customers entering the personal lines auto insurance market each year, insurers have only one option when it comes to growing their business: taking market share from competitors.
The J.D. Power 2019 U.S. Insurance Shopping Study finds that success in acquiring new customers requires having a strong brand and meeting customer expectations for convenience and competitive pricing. Insurers that are largely reliant on exclusive agents for new business growth are finding it more difficult to meet these needs than direct and independent agents. The direct and independent agent channels continue to show increasingly higher levels of customer satisfaction, while the exclusive agent channel is falling behind.
“We’re entering a new era of consumerism in the auto insurance marketplace, in which customers are in the driver’s seat when it comes to the shopping and servicing of their policies,” says Tom Super, vice president of Insurance Intelligence at J.D. Power. “That trend is having a profound effect on the relationship between insurers and customers.”
For insurers to win and keep the business of these empowered customers, such factors as choice, personalization, and a strong reputation are more critical than ever. Insurers face significant pressure to get their customer models aligned with the proper mix of self-service tools, strong brand awareness, and an engaged distribution network.
These new customer priorities help explain why the direct and independent agent models resonate with customers. In the shopping process, top-performing insurers are operating as customer-facing brands. For instance, insurers that achieve the highest consideration and quote rates among profiled insurers also achieve strong unaided awareness and are perceived as being innovative, with likable advertising and competitive pricing.
Now in its 13th year, the U.S. Insurance Shopping Study measures auto insurance shopping, purchase behavior and purchase experience satisfaction among customers who recently purchased insurance. Satisfaction is measured in three factors (in order of importance):
- Distribution channel, and
- Policy offerings.
The study is based on responses from more than 14,400 insurance customers who requested an auto insurance price quote from at least one competitive insurer in the past nine months and includes more than 38,800 unique customer evaluations of insurers.
Insurers are scored on a 1,000-point scale, with an industry average in 2019 of 852.
The slideshow above reveals the insurers that made the top 10 customer satisfaction rankings for 2019.
Shopping and switching
While very few new customers have entered the auto insurance marketplace this year, the number of existing customers shopping for new policies has increased by 4 percentage points to 33 shops per 100 policies. Likewise, the rate of switching among insurance shoppers has increased from 31% to 35% during the past year. These two factors have driven down overall insurance customer retention by 2 percentage points to 88%.
Price and financial outlook
Almost one-third (64%) of insurance shoppers cite price as their primary reason to look for new insurance. Competitive pricing (33%) is the most influential driver of the decision to close with a brand. When customer satisfaction with price is lower, shopping rates are higher the following year. Conversely, when satisfaction with price is higher, shopping rates are lower the following year. Shopping rates are also higher when customers have a more positive personal financial outlook.
Independent agents remain strong
The direct and independent agent channels continue to show increasingly higher levels of customer satisfaction, while the exclusive agent channel is falling behind.
Brand awareness is critical
Insurance shoppers obtain an average of three to four quotes when shopping, making it critical for insurers to be top-of-mind to make it into the consideration set. Brands recalled on an unaided basis are twice as likely to be considered and quoted than brands that are only recognized on an aided basis.
The next insurance business frontier
High-value shoppers — a segment of the marketplace that represents preferred risk profiles, better credit scores, fewer traffic violations and more insurance products — account for 22% of all insurance shoppers identified in the study. Currently, very few insurers are gaining more high-value customers than they are losing, underscoring the importance of attracting and retaining this lucrative subset of the market.
- 22 auto insurers ranked highest for claims satisfaction by J.D. Power
- Top 15 commercial auto insurance carriers in 2018, ranked by the NAIC
- 20 best car insurance companies of 2016 ranked by consumers