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J.D. Power research shows that average premiums on automotive insurance policies have been increasing by 2-3% annually, over recent years. Meanwhile, new insurance shopping rates and new customer acquisition rates are flat, and auto insurers are facing the challenges of resisting commoditization of their product—and the public perception that auto insurance is indeed a commodity. According to the study, as auto insurers struggle to compete on price, they are being forced to differentiate based on factors such as brand reputation, agent recommendations, product, and service to drive new business sales.
The study shows that the key performance indicator (KPI) that has the greatest influence on customer satisfaction is ensuring that customers completely understand their coverage.
“The auto insurance industry is at an inflection point where customer patterns and behaviors are on the verge of shifting,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. “To survive this period of price stagnation, insurers must develop strategies to be able to better differentiate not just to acquire new customers, but also to acquire customers with desirable risk profiles in order to maintain profitability.”
Erie Insurance Ranks Highest for Fifth Consecutive Year
Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience, with a score of 879 out of a possible 1,000 points. This marks the fifth consecutive year Erie Insurance has ranked highest in the study. American Family ranks second (869), followed by The Hartford (861), Automobile Club Group (852), and Amica Mutual (850).
Based on the study, J.D. Power offers the following consumer tips:
About the Study
Now in its 11th 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): price, distribution channel, and policy offerings.
The study is based on responses from more than 16,400 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past nine months and includes more than 50,000 unique customer evaluations of insurers. The study was fielded in April, July, and October 2016 and January 2017.