J.D. Power: Auto insurance shopping rates increase in 2023

J.D. Power's 2023 U.S. Insurance Shopping Study, recently published with 2023 first-quarter results, reports that auto insurance shopping has continued to increase from late 2022. As inflation continues to raise premium rates – auto insurance costs jumped 14.5% in February 2023 at over twice the inflation rate of 6% – consumers are focused more on finding the right price for their budgets and saving money, resulting in the shopping and switching rate hikes seen last quarter.

"Auto insurance customers are starting to shop for insurance like they shop for gas," said Stephen Crewdson, senior director, insurance business intelligence at J.D. Power, in a news release statement. "They are taking a much more active stance in seeking out plans that fit their needs and their budgets, which could have a serious long-term effect on carriers that have been working for years to build lifetime value through bundling and other initiatives. In the near term, this shopping trend manifests itself in increased customer interest in usage-based insurance (UBI) plans and some reshuffling of market share among the top carriers."

The trend of UBI adoption is continuing, as well, as customers are prioritizing ways to save money. UBI programs are becoming increasingly available to customers, with programs purchased 18% of the time and offered to 22% of auto insurance shoppers – this is a 12% increase in purchase rate and 16% increase in offer rate since 2020. 

Crewdson writes to Digital Insurance, "Our 2023 U.S. Insurance Shopping Study shows that more auto insurance shoppers are offered UBI while shopping and more are choosing UBI (and receiving a discount) than ever before. As the UBI offer becomes more ubiquitous, the effect on overall satisfaction decreases this year but as premiums are increasing dramatically, the effect of offering UBI has an even larger effect on price satisfaction than in years past."

The report notes that customer satisfaction increased by as many as 6 points when a UBI product was offered. Overall for 2023's first quarter, auto insurance shoppers' average satisfaction remains the same as last year at 861 out of 1,000 points, despite the rate increases in insurance shopping and switching. The study reports that the 30-day average shopping rate in March 2023 was 13.1%, higher than the average of 11.4% in 2021, and the 30-day average of the switching rate was 4.1% higher than the average of 3.4% seen in 2021.

The study ranks State Farm as the best large auto insurer in providing customers with a satisfying experience, followed by Liberty Mutual and Nationwide, respectively. The Hartford was ranked the highest among the midsize insurers for the second year in a row. Following first place is Erie Insurance and Automobile Club of Southern California.