As 40% of consumers saw their rates increase, carrier ad spending has decreased and telematics adoption has stabilized after an initial surge, according to a J.D. Power report.
Auto insurance shopping activity is at a two-year high, according to a quarterly report from J.D. Power in collaboration with TransUnion, showing that consumers are taking note of rate increases from their insurers.
The quote rate for auto insurance in the fourth quarter of 2022 was 12.1% and the switch rate was 4.1%—the highest levels in the more than two years since J.D Power has been doing the quarterly loyalty indicator and shopping trends (LIST) report.
At the same time, carriers' spending on ads has decreased after more than two decades of rapid growth in ad spending, the study notes. The fall in ad spending is attributed to severe cost pressures, leading to some carriers even closing acquisition channels to slow the growth of new, unprofitable business.
As consumers are increasingly interested in switching insurers in an environment in which carriers are less interested in their business, “how this plays out in 2023 will be something we will watch throughout the year," the study noted.
Telematics adoption, often viewed as a solution for rising auto premiums, has stabilized after an initial surge in early 2022. While 60% of consumers who were offered a telematics program opted in to participate, and most reported satisfaction with the program, over 40% of consumers saw their rates increase. The lack of pay-off may hinder continued adoption.
“The value proposition of telematics is that consumers give up some sense of privacy or autonomy to provide insurers a demonstrably safe driving record in real-time," said Michelle Jackson, senior director of personal lines market strategy at TransUnion. “If they're not seeing that translate into lower rates, or if their rates actually increase, some may not continue with the program."
Usage-based insurance (UBI) may continue its trend of disrupting auto and home bundling, which J.D. Power observed in an earlier study. Consumers who have both an auto policy and a homeowners policy but place them with different carriers are much more likely to shop for UBI—up to 4.8% in the fourth quarter of 2022, from 2.8% in the third quarter. Similarly, monoline auto customers who don't have a homeowners or renters policy are also more likely to shop for UBI.
AnneMarie McPherson Spears is IA news editor.