Many auto insurance customers looked around for new policies during the coronavirus pandemic, but few cared about specific brands, according to the J.D. Power 2021 U.S. Insurance Shopping Study.
According to the survey, more than half (54%) of auto insurance customers took no action to control their insurance costs during the pandemic.
Among the 46 percent who made changes, 17 percent reduced coverage and 15 percent shopped entirely for a different carrier, the survey found. About 12 percent opted for an increased deductible or switched to a different carrier.
J.D. Power found a 6 percentage point increase in the retail activity of customers who had experienced a pandemic-related change in their financial conditions. Behind that number: a pandemic-induced decrease of 55 percent in average mileage and a record 15 percent unemployment rate at the start of the COVID-19 pandemic in early 2020.
“The pandemic has revealed a lot about insurance buying behavior in 2020 as there was a significant increase in retail activity among customers who were financially affected and many were drawn to big, well-known brands and lower-rate offers,” said Tom Super, head of property and casualty insurance at JD Power, said in prepared comments.
Super said the results underscore the need for insurers to get more sophisticated acquisition and retention tools to differentiate themselves.
"Ironically, while the industry's estimated annual ad spend is now close to $ 10 billion, consumers say they see less of the distinction between the top brands," Super said. “After a period of massive disruption and a protracted, uneven recovery, auto insurance customers have higher expectations of factors such as price, flexibility and coverage. Insurers need to get more creative with regard to customer service and delivery as the current incremental changes miss the mark. "
Here are additional results:
- About 43 percent of shoppers were unaware that their insurer was providing assistance because of the pandemic, even as the auto insurance industry returned a record $ 18 billion in auto insurance premiums to customers who drove less.
- The top five insurers in terms of total premiums cover 60 percent of all auto insurance premiums, up from 44 percent 20 years ago. That number has increased by 3 percent in 2020. The reason: Unaided brand awareness despite $ 10 billion in consumer advertising.
- Liberty Mutual and State Farm ranked highest among the major auto insurers in providing a satisfying buying experience, with a score of 872 out of 1,000, just above the segment average of 871.
- American Family ranks high among mid-sized auto insurers with 899, while Amica Mutual is second with 891. Erie Insurance third with 882. The average score for this segment is 858.
Source: J.D. Power
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