Auto insurance deals harder to come by; more drop policies

The latest study of auto insurance shopping trends by J. D. Power suggests consumers may be tiring of seeking bargains as nearly all carriers are imposing auto insurance rate increases, with a larger percentage of drivers going without insurance as premiums rise.

Stephen Crewdson, senior director for insurance intelligence at J.D. Power, said in the premium-rising environment, bargains were hard to come by.

“If we look back a few quarters, not every insurer was increasing rates. So customers who found that their premium went up could shop and find a better, more attractive premium and then switch,” he said. “Now they're finding that premiums are higher everywhere, and so they’re not as likely to switch.”

Uninsured rate rises from 11% to 15%

Auto insurance rate increases are impacting consumer spending considerations and priorities as nearly 15% of respondents said they owned or used a car without valid insurance or they allowed coverage to lapse – up nationally from 11% in the second quarter of 2022. Of those currently uninsured, nearly 30% cited inability to pay as the primary reason.

Individual state numbers, however, show a more dire picture in some respects, as Crewdson said that over three years some states have seen a more than 50% rise in the number of uninsured drivers.

Over three years, some states have seen a more than 50% rise in the number of uninsured drivers, Crewdson said.

"As costs continue to rise, some consumers are forced to make decisions on which bills to pay, and insurance ranks behind mortgage/rent, vehicle payment, credit cards and utilities in terms of priorities,” said Michelle Jackson, senior director of personal lines market strategy at TransUnion, which partnered with J. D. Power on the survey.

"It’s not coincidental that as the industry started ticking up premiums, the rate of uninsured drivers went up commensurate with that,” Crewdson said. “There's enough smoke there so there’s probably a fire."

Auto insurance rate increases deter shopping

The overall numbers for the second quarter of 2023 show that quote rates – the percentage of consumers seeking new rates – remained steady at 12.4%. But there was a big drop from May to June, with shopping going down from 12.8% to 12.1%, an indication, J.D. Power said, of consumer fatigue with lower premiums being harder to find.

Meanwhile, the switch rate – the percentage of consumers who change auto insurers – did not change in the second quarter after continually rising in previous months, again indicating that finding a policy with a lower premium is becoming more difficult.

“If there's a surprise in the numbers right now is that the switch rate did not increase again this quarter,” said Crewdson. “We've seen shopping go up quarter over quarter over quarter, but the switch rate has flattened.”

The shopping rates were heaviest in the south and Midwest, according to the J.D. Power report. A look at which company is benefitting most from consumers who do switch showed Progressive taking business away from nearly every major insurer, including Allstate, GEICO, Liberty Mutual, State Farm, and Travelers.

The survey’s loyalty tracker showed customers of The Hanover, Amica, and USAA had the highest levels of loyalty, while Progressive, GEICO, and Liberty Mutual were among the lower loyalty list.

Crewdson said J.D. Power expects to release reports in the coming weeks that drill deeper into the issue of rising uninsured motorist rates.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.