Auto insurers face a competitive environment, and Erie Insurance came out on top in customer satisfaction, according to J.D. Power.
The company garnered the accolade for a sixth consecutive year. Auto-Owners Insurance ranks second and American Family ranks third.
Now in its 12th 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.
Competition is being spurred by a combination of record-low volumes of new insurance shoppers, consistent price competition among insurers, and emerging “insurtech” disruptors on the horizon that have forced auto insurers into aggressive customer courtship mode, according to the study.
With less differentiation in the marketplace, insurers are investing heavily in new digital capabilities to improve the insurance shopping process and in national advertising to build their brands.
“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, in a release. “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.”
Brand reputation is the top driver of consideration, contributing 29% of what influences an insurance shopper to research an insurer’s offerings. Accordingly, the top 10 insurers in terms of total market share now write 72% of all business in the country, up from 64% in 2000. While a strong brand, among other factors, can help drive traffic, a strong value proposition remains essential in driving quote and close rates.
Delivering a consistent omnichannel experience is critical. Among auto insurance shoppers, 45% use multiple channels when purchasing a policy, illustrating the need for insurers to develop digital capabilities that support the rest of their business functions, not replace them
Insurtech customer awareness still low. While insurtech companies have raised more than $7.1 billion globally since 2012, the level of awareness of alternative insurance models is still relatively low among insurance shoppers. Just 6% of prospective customers indicate being aware of at least one of the following companies: Lemonade, Metromile, Trov and Sure. Less than half of shoppers who are aware of a given provider would consider doing business with them in the future.
Directs are winning purchase experience battle: Overall satisfaction among shoppers who purchased insurance from companies that primarily sell directly to the customer is 846 (on a 1,000-point scale). This compares with a score of 842 among shoppers who purchased insurance from companies that primarily sell through independent agents and 834 among those who bought from insurers who primarily sell through exclusive agents.
The study is based on responses from more than 15,000 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 2017 and January 2018.