Nearly half of new auto policies are now purchased through digital channels, according to a new report from JD Power.
The study found that 48% of policies are being sold online, up from 36% just one year ago, as customers increasingly turn to AI and mobile apps to evaluate policies.
While fewer customers are shopping for auto insurance this year (53% compared to 57% last year), numbers are still high by historical standards, likely because digital tools are making it easier to shop around, the report found.
"We're moving from a crisis-driven market to a digital‑ and AI‑driven market," said Stephen Crewdson, managing director, insurance intelligence at JD Power, in a statement. "Even as rate pressure eases, customers are getting more quotes than ever because mobile apps and AI tools make it so much easier to compare options and understand coverage."
Customers now receive an average of 3.5 quotes when they're shopping, the highest level in the study's history.
"Separate JD Power research indicates that shoppers who use AI during their insurance journey are more likely to switch insurers and feel more confident in their choices—a sign that AI is likely explaining coverage options and trade‑offs more clearly than traditional methods," Crewdson said. "The battleground now is how clearly and confidently insurers can show up in those digital spaces and AI‑driven interactions."
Getting the digital quoting experience and pricing right can make a big difference for insurers, especially when it comes to bundling opportunities. The study found that, among customers who recently shopped for an auto policy, 45% also have a homeowners policy but only 20% received a homeowners quote.
"Most customers are only shopping their auto policy, and if the auto quote isn't competitive, they don't stick around to discuss home, life or other financial products," Crewdson said. "In practice, if an insurer can't be competitive on auto, the door usually closes on any chance to bundle additional policies."
Usage-based insurance (UBI) policies are also gaining popularity. UBI policies, which use telematics software to base a driver's rates on safety and mileage metrics, are now used by 20% of customers. Among recent shoppers, 30% enrolled in UBI, and 44% said it was important in their shopping process.
At the state level, the South, including Oklahoma, Mississippi and Texas, has the highest number of drivers shopping and switching. New England states like New Hampshire and Vermont have low shop and switch rates, likely due to lower premiums.
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