Just two insurance carriers – GEICO and Progressive – snagged nearly 92% of all premium growth last year, according to a new study by J.D. Power. The result seems to cement a trend toward increased adoption of direct-to-consumer auto insurance that’s been building for years – and is likely to grow even more in response to the COVID-19 pandemic.
“Over the past decade, auto insurance costs have risen at two times the rate of inflation,” said Tom Super, head of property and casualty insurance at J.D. Power. “That’s consuming a larger share of discretionary income and playing an increasingly significant role in household finances. Add the effects of record-high levels of unemployment and the 52% of auto insurance customers who say they plan to either reduce coverage, shop for another carrier or switch to another carrier because of COVID-19, and the outcome for the industry is clear: price is going to be a bigger factor. Direct insurers are in the best position right now to benefit from this trend due to their cost-of-acquisition advantages, but there’s more to acquiring – and retaining – customers than price alone. Customers who have a poor experience are eight times more likely to shop than those who do not, and brand perception remains critical.”
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