The search for lower prices has driven consumer behavior of auto insurance more than any other factor in 2020, as the financial fallout from the Covid-19 pandemic has rocked many American households. Major auto insurance brands have benefited the most, according to the recently released JD Power 2021 US Insurance Shopping study.
Key points to remember
The pandemic and its economic fallout have caused many consumers to change their auto insurance policies or purchase better rates.
17% reduced their coverage, 15% bought a new insurer and 12% increased their deductibles.
12% have opted for another carrier, with major brand insurers earning the most.
Unemployment, a determining factor
The 15% unemployment rate in the United States prompted many customers to seek policies with lower rates once the pandemic began, researchers at JD Power found.
Consumers who experienced a change in their finances as a result of the pandemic were largely responsible for a six percentage point increase in auto insurance policy buying activity.
In total, 46% of auto insurance customers made changes to their policies in 2020. The most common change (17%) was reduction in coverage, according to the study. This was followed by finding a new insurer (15%), increasing deductibles (12%) or moving to another insurer (12%).
Well-known brands have reaped the rewards
Familiar auto insurance brands gained the most as customers searched for better deals, with the top five insurers seeing a 3% increase in customer migration year-over-year, according to the ‘study.
Collectively, the top five insurers account for about 60% of all auto insurance premiums, according to the study.
These giants are, in order of written premiums: State Farm, Geico, Progressive, Allstate and USAA of the Berkshire Hathaway Group, according to the National Association of Insurance Commissioners (NAIC) 2020 Market Share Report. State Farm leads the pack with over 16% of the market.
Despite nearly $ 10 billion in annual consumer advertising by the auto insurance industry, the migration has been mostly fueled by prior knowledge of companies and pricing, JD Power said. Bargain buyers have found little other way to differentiate businesses.
But customer satisfaction always varies
The JD Power study also examined the level of consumer satisfaction with their insurers. Liberty Mutual and State Farm scored the highest among large insurers, scoring 872 out of a possible 1,000 points. But Allstate, GEICO and Farmers were not far behind. The average for large insurers was 871. (USAA, which is not included in the ranking due to its membership requirements, scored 902.)
Among mid-sized auto insurers, American Family tops the list with a score of 899, followed by Amica Mutual with 891. The average for this group is 858, which shows a greater variation in satisfaction than the larger ones. insurers.