Rising insurance costs are prompting more customers to shop around for alternative carriers, according to a new J.D. Power study.
“Auto insurance customers are starting to shop for insurance like they shop for gas,” said Stephen Crewdson, J.D. Power’s senior director of insurance business intelligence. “They are taking a much more active stance in seeking out plans that fit their needs and their budgets, which could have a serious long-term effect on carriers that have been working for years to build lifetime value through bundling and other initiatives. In the near term, this shopping trend manifests itself in increased customer interest in usage-based insurance (UBI) plans and some reshuffling of market share among the top carriers.”
According to the study, which is available online with a subscription, the insurance shopping rate reached 13.1% in 2023, the highest rate since June 21, 2021. Meantime, the 30-day switch rate reached 4.1% in March, compared to a yearly average of 3.4% in 2021.
Overall satisfaction among those shopping for new carriers remained flat year-over-year, despite shopping and switching insurers increasing, the study found.
Rising insurance costs have triggered more policyholders to shop around, J.D. Power said, noting auto insurance prices rose 14.5% in February alone.
“Accordingly, among those shopping for reasons of price, 44% say they are price checking and 42% say they are being spurred by a rate increase,” it said. “Similarly, 41% of those shopping because of a rate increase say that their rate increased 20% or more.”
The study also found that more insurers are purchasing UBI programs to monitor customers driving habits and base their rates on safety and the amount of road miles driven.
The telematics programs are now offered to 22% of insurance shoppers with 18% buying them, compared to 2020, when they were presented to