Auto insurance discounts are tempting consumers to switch insurers, rather than building loyalty, during pandemic: J.D. Power survey

As unprecedented economic pressure builds on consumers, auto insurance will need to adapt: J.D. Power COVID-19 consumer impact and outlook report

Troy, MI (Apr. 27, 2020) – In the midst of the global coronavirus pandemic and its economic fallout, auto insurers in particular have announced a variety of plans to support their customers, ranging from premium discounts to waived fees and deferred payment options. But these relief measures are not having the desired effect: rather than increasing customer loyalty, they are inciting consumers to shop around for alternative coverage from other insurers, according to a new study from market research company J.D. Power in partnership with Cambridge Mobile Telematics.

“Auto insurance satisfaction levels continue to decline,” says the report. “Customers’ initial satisfaction levels are fading toward uncertainty — based upon our historical consumer sentiment database, this almost always results in increased shopping activity.”

J.D. Power found that many customers are not even aware that the relief measures exist: Just 37% of survey respondents said they were aware of the discounts and refunds being offered as of April 14. But even among respondents who knew about the relief measures, half said they were more likely to shop for new insurance or switch/cancel their policies.

More than half of respondents who were aware of discounts and refunds said that the premium relief currently being offered was not enough. And the overall number of customers who said they will cancel their policy has grown fourfold, from 2% to 8%, in just the past four weeks.

Once customers become aware of the premium relief being offered by their auto insurer, they are nearly twice as likely to shop around for coverage, the report reveals.

Key Themes

The report identifies four key themes crystallizing as premium anxiety metastasizes across the industry:

• Premium relief actions probably weren’t big enough to make a Most are still looking for further premium relief:
  • Only 37% of consumers are currently aware of premium relief announcements;
  • Aware consumers are significantly more likely to shop, switch and cancel their policies;
  • Lower credit tiers are largely unaware of premium relief announcements, but are already shopping at high levels.
• A surge in shopping / switching is likely to happen in the near-term; carriers will need to redefine relationships:
  • Perceptions / satisfaction continue to fall, a traditional sign of shopping and only 34% very confident of making next payment;
  • More than 2x increase in propensity to shop / switch in the past three weeks;
  • 40% that lose their job will shop in a matter of weeks.
• Telematics likely to become more important as consumers see new benefits:
  • Traditional barriers to telematics adoption have been privacy / security and discounts not significant enough to bother;
  • Consumers suddenly see a wider range of potential value within telematics and appear to be adopting already;
  • Value likely to become increasingly evident as consumers continues to reduce miles driven.
• Non-standard markets likely to be impacted:
  • Non-standard consumers a largely unaware of recent premium relief efforts;
  • Already shopping at elevated levels prior to learning of premium relief programs;
  • More than 50% of consumers seeking payment relief / extension have lower credit quality.

Access the Report

To learn more, access the full report:

• Auto Insurance Premium Relief During COVID-19: Consumer Impact And Outlook.

About J.D. Power

J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power has offices serving North America, South America, Asia Pacific and Europe.

About Cambridge Mobile Telematics

CMT’s mission is to make the world’s roads and drivers safer. Since its first product launch in 2012 that pioneered mobile usage-based insurance, CMT has become the world’s leading telematics and analytics provider for insurers, rideshares, and fleets. CMT’s DriveWell platform uses mobile sensing and behavioral science to measure driving risk and incentivize safer driving, while its Claims Studio reduces the claims cycle time with real-time crash detection, crash reconstruction, and damage assessment using telematics and artificial intelligence. CMT has over 50 active programs with insurers and other partners, improving safety for millions of drivers every day around the world. Started based on research at MIT and backed by the SoftBank Vision Fund to fuel its rapid growth, CMT is headquartered in Cambridge MA. To learn more, visit www.cmtelematics.com.

SOURCE: J.D. Power