Rising auto insurance costs drive customers to shop around, but without much success: J.D. Power

By Karla Tecson, Front Page News

Forty-nine percent of personal auto insurance customers are actively shopping for a new policy amid rising premiums and lackluster customer satisfaction scores, according to J.D. Power’s 2024 U.S. Insurance Shopping Study.

At the rate auto insurance costs are growing, the firm said it is not surprising that more customers are in the market for a new policy than ever before. The average cost of auto insurance in the U.S. has risen 22.2% year-over-year in February, which is more than any other category of household expenses measured in the U.S. Department of Labor Statistics Consumer Price Index.

“After the past few years of steady auto insurance premium increases, customers are no longer passively keeping an eye out for a better deal. Instead, they are actively seeking new carriers to offset these rising costs,” said Stephen Crewdson, senior director, insurance business intelligence at J.D. Power. “However, with rising premiums across the country and fewer insurers explicitly offering usage-based insurance—or UBI plans—during the quoting process, insurance shoppers are not finding many alternatives.”

Of those who have actively shopped for a new policy, only 29% have switched carriers, according to the study. Insurers have pulled back on offering UBI programs, which use telematics software to monitor an insured’s driving style and assign rates based on safety and mileage metrics. UBI programs were only offered to 15% of insurance shoppers this year, down from 22% in 2023.

In addition to UBI programs, embedded insurance – a form of auto insurance provided directly through the auto dealer or manufacturer – has captured the interest of a growing number of customers, with 35% showing interest.

‘Lackluster’ customer satisfaction scores

J.D. Power’s study, fielded between March 2023 and January 2024, found that average overall satisfaction among auto insurance shoppers is 676 on a 1,000-point scale. The firm based its findings on responses from 10,003 insurance customers who requested an auto insurance price quote from at least one competing insurer in the previous six months.

Electric vehicle (EV) owners said they are less satisfied with their auto insurance purchase experience. “The average purchase experience satisfaction score among EV owners is 663, which is 16 points lower than the average score among owners of gas-powered vehicles. This gap is attributable to lower satisfaction with the quote process and price of the policy because EVs are typically more expensive to insure than comparable gas-powered vehicles,” the study stated.

Of the large auto insurers ranked through the study, Erie Insurance topped the customers’ list in providing a satisfying purchase experience, with a score of 730. Automobile Club of Southern California (AAA) ranked second with 705, while American Family was a close third with 702. Rounding out the top five are State Farm (695), The Hartford (685), and Travelers (680).