According to the results of the J.D. Power and Associates 2011 U.S. Insurance Shopping Study, for the first time since the study’s inception five years ago, a majority of new auto insurance buyers initiated their policy purchase by applying for a rate quote online. In particular, the study found that more than one-half (54%) of insurance shoppers who participated in the survey reported that their got their insurance quote online. As a result, the study found the importance of an insurer’s website in generating new business among new buyers has been steadily increasing for the past five years at the expense of more traditional local agency or call center sales channels.
“This transition to websites as the dominant lead-generation channel is an important shift for insurers to recognize and address in their marketing and sales strategies,” said Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates. “While nearly one-half of all accepted Web quotes are closed by either an agent or call center representative, customers are clearly more often looking to insurer’s sites or third-party sites in the early stage of the shopping process, and this behavior is blurring the lines of how we traditionally think about the discrete sales channels.”
The study, released yesterday, analyzed responses from more than 75,500 unique insurer evaluations and includes responses from more than 15,500 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 12 months. It then examined consumer shopping and purchasing behaviors nationwide as well as their overall satisfaction with their auto insurance purchase. In particular, J.D. Power uses buyer responses and satisfaction with an auto insurance provider and its distribution channel, policy offerings and price. The results of the study indicate that within the distribution channel analysis, insurer’s websites now account for more than one-fourth of the importance weight for buyers, second only to local agents.
An additional finding from the study determined that the rate of policy churns in the U.S. market also has increased during the past two years mimicking those last seen in 2008. J.D. Power says that this trend is driven in part by an increase in the rate of shopping among insurance customers, which averages 33 percent in 2011 (compared with 27% in 2009 and 30% in 2010), as well as a significant increase i the rate of switching companies among shoppers.
The study says that among those insurance customers shopping for insurance in 2011, approximately 40 percent of those shoppers switched to a new insurer this year as opposed to only 33 percent of shoppers in 2010.
“In 2010, the insurance industry spent $5 billion on marketing and advertising, with the top four companies alone spending more than $2.6 billion,” explains Bowler. “As a result, the rate of shopping has increased significantly year over year, as had the policy defection rate. A majority of the customers shopping for a new insurer are doing so either because of a life event that has changed their insurance needs, or because they are looking for a better deal. However, no group is more interested in switching than customers who are displeased with the service provided by their incumbent insurance company.”
The following graph outlines the customer satisfaction index rating of the top 20 auto insurance providers in the United States.