• by Tanya Gazdik , June 2, 2011

American Family Insurance ranks highest among auto insurance companies in satisfying new buyers with the purchase experience, according to the J.D. Power and Associates 2011 U.S. Insurance Shopping Study released today.

Scoring 864 out of 1,000 points, the Madison, Wis.-based insurer performs well in the policy offerings and distribution channel factors, primarily driven by the performance of their exclusive agents. Rounding out the top three are Auto-Owners Insurance, with an overall average satisfaction score of 860, and Erie Insurance, with 857.

The study also includes a management discussion that takes a closer look at the recent use of humor in advertising by Allstate and its key competitors -- State Farm, GEICO and Progressive -- to try to differentiate themselves and appeal to younger consumers.

While comedy-driven efforts such as Allstate's "Mayhem" campaign have generated buzz in the marketplace and have led to higher unaided awareness and consideration rates, quote rates for Allstate have increased by only 2 percentage points, according to the study.

Allstate is the only brand among the four that has achieved growth in its quote rate among Millennials and Gen X consumers, said Jeremy Bowler, senior director of the global insurance practice at Westlake Village, Calif.-based J.D. Power and Associates. "In contrast, other insurers are quoting an average of 3 percentage points fewer Millennials and Gen X shoppers, compared with one year ago," he says.

The study also found that a majority of new buyers of auto insurance initiated their policy purchase by applying for a rate quote online. The importance of an insurer's Web site 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.

Within the distribution channel factor, the Web site now accounts for more than one-fourth of the importance weight, second to the local agent. In addition, more than one-half (54%) of insurance shoppers report getting their quote online.

The study also finds that the rate of policy churn in the U.S. market has increased during the past two years, returning to levels not seen since 2008. This is driven by an increase in the rate of shopping among insurance customers, which averages 33% in 2011 (compared with 27% in 2009 and 30% in 2010), as well as a significant increase in the rate of switching companies among shoppers.

Among insurance customers who indicate they have shopped for insurance in 2011, 40% switched to a new insurer -- up from 33% 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. As a result, the rate of shopping has increased significantly year-over-year, as has 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, Bowler says. However, not surprisingly, no group is more interested in switching than customers who are displeased with the service provided by their incumbent insurance company.

The study, now in its fifth year, examines consumer shopping and purchasing behaviors and overall satisfaction among buyers who recently purchased from an auto insurance provider across three factors: Distribution channel, policy offerings and price.

It is based on 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, and includes more than 75,500 unique insurer evaluations. The study was fielded from March to April 2011.