Each 1 Percent of Shoppers that Switch Carriers Produces More than $100 Million in Annual Premiums

WESTLAKE VILLAGE, Calif., June 26 -- The average auto insurance customer gathers three competitive quotes while shopping for a new provider, and while the majority of insured shoppers remain with their current carrier, 33 percent will switch, according to the J.D. Power and Associates 2007 Insurance Shopping Study(SM) released today.

The study finds that while 33 percent of consumers who shop because of price ultimately switch, nearly 75 percent of consumers who shop because they have experienced poor customer service switch carriers.

"This suggests that when a customer becomes dissatisfied with their incumbent carrier, they are more motivated to shop and switch," said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. "In contrast, while many shop to verify they are getting a competitive price, this group is less likely to switch insurers."

The study identifies the elements shoppers seek from an insurance provider to better assist insurance carriers in understanding their relative strengths and weaknesses, which can ultimately increase their market share. Three key stages, which are collectively described as the purchase funnel, are identified within the shopping process: awareness, requesting a quote, and purchase decision. The chart below presents the average performance across all insurance carrier brands at each stage.

"By increasing performance in brand awareness, the number of quotes issued or close rates, a carrier can focus attention on the specific competitive issues that impact their growth," said Bowler.

The study also compares the relative success of 20 major insurance carriers in providing a satisfying purchase experience for customers. Quote rates among shoppers who are familiar with a particular carrier range from 5 percent to 43 percent, and close rates range from 7 percent to 47 percent.

"Every carrier displays strengths and weaknesses within the purchase funnel," said Bowler. "By understanding and maximizing their performance, carriers have opportunities to enhance their growth. Some could enjoy greater growth by building awareness, but do very well in close rates, while others with strong awareness do not inspire consumers to request a quote. How well insurers understand the divergent needs and decision drivers of their prospective customers at the various shopping stages can mean the difference between a sale and an escaped shopper."

Additionally, more than 50 percent of auto insurance shoppers also shop for other types of insurance coverage. Nearly 40 percent of shoppers look for auto and homeowners insurance bundles. Consumers who shop for multiple products generally switch at a higher rate than those who only shop for auto insurance.

The 2007 Insurance Shopping Study is based on responses from 6,050 consumers who requested an auto insurance price quote from at least one competitive insurer in the past 12 months and includes evaluations of 18,929 unique carrier quotes. The study was fielded from March to April 2007.

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Source: J.D. Power and Associates