Auto Insurance Shoppers’ Channels of Choice Are Digital

Digital leaders set the pace for premium growth; Erie Insurance and Liberty Mutual rank highest (tied) in purchase experience customer satisfaction

Detroit, MI (May 4, 2016) – Insurers that lead in digital shopping channels also lead in premium growth, according to the newly release J.D. Power 2016 U.S. Insurance Shopping StudySM.

Now in its 10th year, the 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.

Direct premiums written (DPW) in the personal lines auto insurance market in the United States increase by approximately 4.7% to $199 billion in 2015,(1) with much of that growth coming from new business generated by direct writers.

“Direct writers have invested heavily in digital channels to increase the functionality and ease of using their websites, which has clearly created an advantage for direct distribution relative to traditional agency distribution in some respects and has supported agency distribution in others,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power.

Customers shopping for an insurance provider often go online to do so, as 74% of shoppers use insurer websites or aggregators for obtaining quotes and researching information. While nearly half of customers obtain a quote via insurer websites, only 25% actually purchase their policy online; 50% close through an agent and 22% phone a call center. This is due in part to the underperformance of agency writer websites—agency writers quote nearly as many shoppers on their website as they do through their agency channel (38% vs. 40%, respectively), yet just 10% of agency writers’ new business is closed on the website. To make it easier for customers and improve close rates, a few insurance companies are offering online shoppers assisted chat “virtually” with a representative or agent.

“While many customers want to shop online, they often still want to talk to someone when they buy their insurance to make sure they are getting the right coverage or have questions about their policy answered,” said Hoeg. “Maintaining a competitive advantage in digital capabilities through websites and mobile applications is critical. Insurers need to focus on the delicate balance of providing an easy shopping experience while providing product differentiation and professional service.”

Differentiation Is Imperative as Fewer Customers Are Shopping

Hoeg noted that fewer auto insurance customers are in the market shopping for a new insurer in 2016, compared with 2015, believing the potential savings aren’t worth the effort. With many insurance providers keeping their rates flat—some even lowering them—many customers simply are not compelled to shop around. The study finds that fewer auto insurance customers are shopping for a new insurer, down to 33 shops per 100 policies in 2016 from 39 in 2015, and among those who are shopping, only 30% actually switch, the same pace as a year ago. In addition, customers who do switch are saving an average of $356 on their annual premiums, less than the $388 savings for those who switched in 2015.

“With more price competition and smaller savings, there simply is not as much motivation for most customers to switch,” said Hoeg. “Many policyholders see insurance as a price-differentiated commodity, and shoppers are opting to remain with their incumbent insurer as they find the savings offered by competitors is not as great as they had expected, or as much as they saved the last time they switched.”

Key Findings

  • Satisfaction with the purchase experience among customers who recently bought a new policy drops to 826 (on a 1,000-point scale) in 2016 from 833 in 2015. The 7-point decline moves satisfaction back to near the level of 828 found in 2012 and 2013.
  • Young shoppers have the highest adoption rate of online-only quoting. Gen X(1) and Gen Y are most likely to get price quotes exclusively online at 29% each, while 17% of Pre-Boomers are getting their quotes only through online channels.
  • Assisted online has a significant impact on insurers’ ability to convert shoppers from quote to close—close rates are more than 1.5 times higher when shoppers get quotes on insurer websites and use the assisted online options vs. overall close rates through the website.

Study Rankings

Erie Insurance and Liberty Mutual rank highest in a tie among auto insurers in providing a satisfying purchase experience, each with a score of 853. This marks the fourth consecutive year Erie Insurance has ranked highest in the study.

The Hartford ranks third (850); American Family fourth (845); and Automobile Club Group fifth (840).

The 2016 U.S. Insurance Shopping Study is based on responses from more than 17,000 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 9 months and includes more than 50,000 unique customer evaluations of insurers. The study was fielded in April, July and October 2015, and January 2016.

About the Study

The Challenge: Customers have been increasingly shopping for and switching auto insurers in recent years. Most insurers know why their customers select them. Some also know why they lose customers to their competitors. However, very few know why consumers consider them but ultimately select another insurer. Understanding the reasons consumers don’t select your brand, as well as why they choose another brand, are critical elements in your company’s ability to grow.

The Solution: The J.D. Power 2016 U.S. Insurance Shopping StudySM provides an in-depth look at the entire auto insurance policy selection process to understand which customers are shopping; what triggers their shopping; their attitudes toward and perceptions of auto insurance brands; and how they make their final purchase decision. The study explores the most critical drivers of winning new in various segments of the market.

The study provides insights into how insurers can continue to improve customer satisfaction with the shopping and purchase process.

Download the 2016 fact sheet for additional details about this study.


1. SNL Financial, based on preliminary estimates for the full year of 2015.

2. J.D. Power defines the generations as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (1995-2004). Millennials (1982-1994) are a subset of Gen Y.

About J.D. Power

Since 1968, organizations around the world have relied on J.D. Power as a trusted advisor for deep expertise in the industries we serve, advanced research science to drive insights, and a proven success record for driving results.

By analyzing the many aspects of the customer experience, J.D. Power can identify the multiple drivers of that experience, measure and understand the impact of those drivers, and help drive business results by monitoring and improving performance.

Source: J.D. Power   (view this press release online)