Four surprising takeaways from this year’s 2018 J.D. Power 2018 U.S. Insurance Shopping Study,SM
J.D. Power recently issued the results of its annual U.S. Insurance Shopping Study. In addition to its traditional look at the major trends of insurance shopping consumers, this year’s report also includes some additional findings offers four other interesting insights.
Insurtech customer awareness still low
While its true that there are not very many in the insurance industry who have not heard or discussed the rise of both insurtech and insurtech investments over the past fews years, J.D. Power’s says that the public’s awareness of the influence of insurtech in insurance does not yet match the awareness within the insurance industry.
The study found that even though almost $7.1 billion dollars has been invested into insurtech innovation across the globe since 2012, the actual level of awareness of alternative insurance models is “still relatively low among insurance shoppers.”
Citing the statistics it had compiled for the study, J.D. Powers notes that only 6% of prospective customers surveyed indicated were aware of at least one of the following insurtechs: Lemonade, Metromile, Trov and Sure. Moreover, the study said that less than half of those shoppers, who were aware of one of the given insurtech providers, would actually consider doing business with them at some point in the future.
In comparison, right now directs are winning purchase experience battle
With insurtech awareness still low among consumers, the second take-away from this year’s study says that in terms of the overall satisfaction, shoppers who purchased their insurance from companies selling directly to consumers were the ones “winning the purchase experience battle” right now.
Referring to their study scoring, J.D. Power said insurers selling direct to consumers had the highest customer satisfaction with a score of 846, on a 1,000-point scale. Not too far behind, but still in second place, were customers who purchased their insurance via companies selling through independent agents. The satisfaction level for this group was 842 on a 1,000 point scale. Shoppers buying their insurance through exclusive or captive agents had a satisfaction level of 834.
Brands reputation matters
Another surprising take-away was the importance of brand reputation. J.D. Powers says it is actually the top driver of consideration, “…contributing 29% of what influences an insurance shopper to research an insurer’s offerings.” This is evident in the fact that the top 10 insurers in the U.S. now write an overwhelming 72% of all business. The study notes that this percentage is up from 64% in 2000.
While a strong brand, among other factors, can help drive traffic, J.D. Powers cautions, “a strong value proposition remains essential in driving quote and close rates.”
Delivering a consistent omnichannel experience is critical
Almost half of all auto insurance shoppers, or 45%, use multiple channels when purchasing their policies. With this percentage in mind, J.D. Power says that the need for insurers “…to develop digital capabilities that support the rest of their business functions, not replace them.”
Auto Insurers Double Down on Ads and Digital Investment as Shopping Stagnates, J.D. Power Finds
In addition to the above take-aways, this year study overall found that the auto insurance shopping experience is entering an entirely new phase.
We’re entering an era of consumer-centric insurance that will likely be marked by a surge in new digital offerings and serious efforts by insurers to improve the auto insurance shopping experience,” said Tom Super, Director of the Property and Casualty Insurance Practice at J.D. Power. “Auto insurers looking to differentiate and win new customers are making big bets with digital—such as in personalization—that meet customers’ growing expectations for improved interactions.”
Market factors have converged into “a perfect storm of record-low volumes of new insurance shoppers, consistent price competition among insurers, and emerging “insurtech” disruptors, not to mention the advent of self-driving autos on the horizon, these factors are forcing auto insurers to up their game and to enter into a more “aggressive customer courtship mode.”
In particular, auto insurers are increasingly relying on new digital capabilities to improve the insurance shopping process. Advertising, also mentioned in the study, is becoming increasingly important to help identify brands in the face of less differentiation within the marketplace.
Which national insurers have the highest ratings…
Each year, the U.S. Shopping study includes a Customer Satisfaction Index Ranking for consumers. While many do not operate in Massachusetts, Agency Checklists thought it was still interesting to include to see what consumers across think: