Price is the main reason US drivers switch auto insurers, and bundling policies no longer protects carriers from losing customers, according to a new survey from LexisNexis Risk Solutions.
The survey of 3,000 US auto insurance consumers found that 86% of those who switched insurers cited price as a reason. Only 15% of those who stayed with their current insurer gave a reason other than price.
“Consumers are increasingly treating auto insurance as an ongoing value comparison, not a one-time renewal decision,” said Jeff Batiste, senior vice president and general manager for auto and home at LexisNexis Risk Solutions.
LexisNexis said auto insurance shopping is at record levels. It said the habit formed when insurers raised rates broadly to restore profitability, and is persisting even as some carriers now cut rates.
Nearly three-quarters (72%) of consumers who shopped said they were open to changing insurers, and 17% were definitely looking for a new one. Most (87%) said shopping was as easy as expected or easier.
Customers who have already switched are likely to do so again. Of those who shopped and switched in the past year, 89% said they would probably shop again if their rates rose, and 96% said they would likely change carriers.
Even older drivers, traditionally the most loyal, are changing their behavior. Among consumers aged 66 and over who shopped in the past year after not shopping for a decade, 64% said they would shop again if rates went up, and 18% said they now plan to shop regularly.
Just over half (53%) of shoppers had their auto policy bundled with other cover. Of those, 40% were open to unbundling or were actively looking to do so. Bundled and unbundled customers switched at similar rates, with roughly a third of each group moving to a new insurer.
Rate increases were the biggest trigger for shopping. Some 70% of consumers said an auto or insurance-related event was the main reason they shopped, and 49% said their rates had gone up or were expected to. Only 24% pointed to a life event such as a change in income or moving home.
Insurance is also affecting car buying. When asked which costs they would definitely consider as part of the total cost of owning a vehicle, 56% named insurance, second only to the monthly car payment (63%).
For independent agents, the findings cut both ways. Clients who shop around regularly are harder to keep, but they also create opportunities to win new business. Agents can compare multiple carriers in one conversation, which gives them an advantage over direct writers when price is the deciding factor.
The finding on bundling is significant for retention strategies. Many agencies have relied on home and auto bundles to keep clients. If bundled customers switch as often as unbundled ones, agents need to market bundles on overall value, rather than assume they will hold clients on their own.
The timing also matters. As carriers start to cut rates, as recent filings in Connecticut show, agents who proactively review clients’ auto cover at renewal can keep price-sensitive clients from shopping elsewhere first.
