Customers find little differentiation among auto insurers – J.D. Power

A 55% decrease in average kilometers traveled and a record unemployment rate of 15% prompted many auto insurance customers to look for new insurance coverage following the outbreak of the pandemic last year. However, buyers found an increasingly homogenized market where price was the main differentiator, according to JD Power. According to the company's US Insurance Shopping Study from 2021, insurers' efforts to differentiate themselves in the market will increasingly depend on bringing more innovative products and services to market.

"The pandemic revealed a lot about insurance purchasing behavior in 2020 as there has been a significant increase in purchasing activity from customers who have been financially affected and interested in big, well-known brands and offers for lower prices," said Tom Super, Head of property and casualty insurance at JD Power. “Experience highlights the need for more sophisticated acquisition and storage tools. Ironically, even though the industry's estimated annual ad spend is now nearly $ 10 billion, consumers are seeing less differentiation between the top brands. After a period of massive disruption and a prolonged, uneven recovery, auto insurance customers have increased expectations for factors such as price, flexibility and coverage. Insurers need to get more creative with customer service and delivery as the current incremental changes are missing the mark. "

Read more: JD Power: Pandemic gave auto insurers "leeway" to refine the customer experience

The main results of the study include:

• 54% of auto insurance customers did not take any action to manage their insurance costs during the pandemic. Of the 46% who made changes, the most common were reducing coverage (17%), purchasing for another airline (15%), increasing the deductible (12%) or switching to another airline (12%) %). For customers whose financial situation has changed due to a pandemic, the purchasing activity increased by six percentage points.
• Many customers were unaware of the insurance industry's relief efforts. The auto insurance industry returned $ 18 billion in auto insurance premiums to customers who drove significantly fewer miles during the pandemic. However, 43% of buyers were unaware that their insurer had made changes due to the pandemic.
• Customers continued their migration to big brands. The top five insurers, as measured by total premiums, now account for 60% of all auto insurance premiums, up from 44% 20 years ago. In 2020, customer migration to the five largest insurers increased by a further 3% compared to the previous year. According to JD Power, unaided brand awareness - despite an estimated $ 10 billion in advertising - has driven the trend.
• Customer lifetime value has become a critical metric for freight forwarders. A quarter of auto insurance buyers are projected to have a higher customer lifetime value due to high creditworthiness and the high likelihood of adding additional insurance products. According to the study, MetLife (33%), Travelers (32%), and Erie Insurance (31%) have the highest mix of high quality customers.

Study rankings

Liberty Mutual and District farm This ranks highest among the major auto insurers when it comes to providing a satisfying shopping experience. Each scored 872 on a 1,000-point scale. The segment average is 871.

American family ranked highest among medium-sized auto insurers with 899 points, followed by America Mutual (891) and Erie insurance (882). The segment average is 858.

read more

https://businessservicesnews.ca/customers-find-little-differentiation-among-auto-insurers-j-d-power/