Auto Trends


Price is a key driver of satisfaction among auto insurance buyers, according to the J.D. Power 2014 U.S. Insurance Shopping Study – Wave 1.

The study examines insurance shopping and purchase behaviors and overall satisfaction among customers who recently purchased insurance across three factors (in order of importance): price, distribution channel, and policy offerings. Retention and shopping rates reflect Q2 2013 results.

J.D. Power reports that rate increases are driving more auto insurance customers to obtain competitive price quotes, while satisfaction with the purchase experience is trending downward among new buyers due to lower satisfaction with price.

Key findings of the study include:

– Price satisfaction declines to 808 (on a 1,000-point scale) in 2014, from 821 in 2013.

– Auto customer retention averages 97 percent, with 3 percent of auto insurance customers switching insurers, fueled by a shopping rate of 8 percent.

– More than 20 percent of new buyers purchased auto insurance online. Therefore, companies that lack a viable quote website are not well-positioned to acquire or sell to one in five customers.

– The average annual savings when switching to a new insurer is on par with 2013 ($387 vs. $386, respectively).

In a press release, Jeremy Bowler, senior director of the global insurance practice at J.D. Power, says:

As rate increases continue to drive customers to shop around for the best price, insurers need to provide a seamless shopping experience, including competitive websites with quote compatibilities and a satisfying on-boarding experience to acquire new customers.

Communicating new offerings and allowing customers to tailor their policies helps demonstrate the value of the policy and improve customer satisfaction.”

The 2014 U.S. Insurance Shopping Study – Wave 1, which for the first time is being conducted on a quarterly basis, is based on responses from more than 5,500 auto insurance shoppers.

Check out I.I.I. facts and statistics on auto insurance.

Overall customer satisfaction with auto insurance companies dipped in 2013 from an all-time high in 2012, but remains comparatively high relative to the previous decade, according to the J.D. Power 2013 U.S. Auto Insurance Study.

The study, which was launched in 2000, measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment and claims.

J.D. Power reports that overall satisfaction with auto insurance companies is 794 (on a 1,000-point scale), down 10 points from 2012. Despite this decline, satisfaction in 2013 is the second-highest level since the study launched in 2000.

Price and policy offerings were key factors contributing to lower overall satisfaction.

In a press release, Jeremy Bowler, senior director of the global insurance practice at J.D. Power says:

In 2013, there is a sharp rise in the number of customers who have experienced premium increases. The dollar amount of those increases is also larger, averaging $153 in 2013, compared with an average rate increase of $113 reported in the 2012 study.”

J.D. Power reports there is a direct relationship between the size of premium increase and the percentage of affected customers who switch insurers. Only 9 percent of customers who experienced an annual rate increase of $50 or less switched insurers, whereas 18 percent of customers switched when the increase was between $51 and $100, and 32 percent when the increase is more than $200.

The survey also notes that insurers achieve higher satisfaction scores when they discuss rate increases with customers prior to sending a renewal letter.

Satisfaction averages 698 among customers who are notified before renewal and discuss their options. This is 67 points higher than among customers who did not get to discuss a rate increase prior to renewal.

The study finds that only 16 percent of customers with a rate increase indicate that they had a discussion with their insurer regarding potentially changing their coverage.

Check out I.I.I. facts and stats on auto insurance.

Turns out using hands-free technologies to talk, text or send email while driving is not as safe as many people believe, according to a new study conducted by the University of Utah for the AAA Foundation for Traffic Safety.

The research found that as mental workload and distractions increase, reaction time slows, brain function is compromised, drivers scan the road less and miss visual cues, potentially resulting in drivers not seeing items right in front of them including stop signs and pedestrians.

The report notes:

The assumption that if the eyes were on the road and the hands were on the steering wheel then voice-based interactions would be safe appears to be unwarranted. Simply put, hands-free does not mean risk-free.”

Researchers measured brainwaves, eye movement and other metrics to assess what happens to drivers’ mental workload when they attempt to do multiple things at once.

The results were used to rate the levels of mental distraction drivers experience while performing each of the tasks. The levels of mental distraction are represented on a scale, as follows:

– Tasks such as listening to the radio ranked as a category “1” level of distraction or a minimal risk.

– Talking on a cell phone, both handheld and hands-free, resulted in a “2” or a moderate risk.

– Listening and responding to in-vehicle, voice-activated email features increased mental workload and distraction levels of the drivers to a “3” rating or one of extensive risk.

Professor David Strayer, lead author of the study, says:

These new, speech-based technologies in the car can overload the driver’s attention and impair their ability to drive safely. An unintended consequence of trying to make driving safer – by moving to speech-to-text in-vehicle systems – may actually overload the driver and make them less safe.”

More on this story from NPR.

Check out I.I.I. facts and statistics on highway safety.

While the percentage of auto insurance shoppers has reached a six-year low, the percentage of those shoppers who select a new insurer is at a six-year high, according to the just-released J.D. Power and Associates 2013 U.S. Insurance Shopping Study.

The study found that only 23 percent of auto insurance customers shopped for a new policy in the past 12 months, but 45 percent of those that did ultimately switched insurer.

J.D. Power notes that the proportion of insurance customers who shop has decreased from a high of 33 percent in 2011, while the switching rate among shoppers has steadily increased from a low of 33 percent in 2010.

The findings come as overall customer satisfaction with auto insurance companies has improved to an all-time high of 804 (on a 1,000 point scale) in 2012. Overall new buyer satisfaction with the auto insurance shopping experience averages 828 for the third consecutive year.

In a press release, Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates says:

Unlike many other industries we measure, policy retention rates for personal auto insurance in the U.S. market average 90 percent. With customer satisfaction generally high and climbing, this industry has witnessed fewer customers shopping, but those who are shopping are serious about switching insurers.”

Another key takeaway from the study is that insurer websites are becoming increasingly important in the new-buyer purchase experience, increasing to 24 percent in 2013, up from 22 percent in 2012.

The call center representative is less influential among customers selecting a new insurer in 2013 (20 percent), compared with 2012 (22 percent), while the local agent remains as influential as in previous years.

As more shoppers are buying their insurance online, J.D. Power says it is vital that insurers provide a high-quality and effective Web experience, whether customers are accessing the site via a desktop computer, a tablet or a smartphone.

The study examines insurance shopping and purchase behavior and overall satisfaction among customers who recently purchased insurance across three factors (in order of importance): price, distribution channel, and policy offerings.

The 2013 U.S. Insurance Shopping Study is based on responses from more than 16,900 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 12 months.

While the dangers of texting and driving get a lot of headlines, you might be surprised at the findings of a new study by Erie Insurance that show daydreaming behind the wheel is even more dangerous.

Erie’s analysis found that 62 percent of distracted drivers involved in fatal car crashes were described by police as daydreaming or “lost in thought”.

The police report data analyzed by Erie in the Fatality Analysis Reporting System (FARS) reveal that of the more than 65,000 people killed in car crashes over the past two years, one in 10 were in crashes where at least one of the drivers was distracted.

Erie did point out that because FARS data on distraction is based largely on police officers’ judgment at the time of the crash, and because some people may be reluctant to admit they were distracted when being interviewed by police after a fatal car crash, the numbers are difficult to verify and may, in fact, under-represent the seriousness and prevalence of driving distractions.

As well as daydreaming, police listed several more specific types of distractions. Below are the top 10 distractions involved in fatal car crashes:

Customers are increasingly satisfied with their auto claims experience, as repairable and total loss claims are being paid faster, according to the J.D. Power and Associates 2013 U.S. Auto Claims Satisfaction Study—Wave 1.

Overall, claimant satisfaction with the auto claims process in the fourth quarter of 2012 increased by six points to 861 (on a 1,000-point scale) from the fourth quarter of 2011, primarily due to an 11-point increase in settlement satisfaction.

J.D. Power noted that slight increases in the ratings of fairness of the claim settlement and timing of the settlement, contributed to the improvement in settlement satisfaction.

The study finds that the average time to pay claimants decreased to 13.9 days in the fourth quarter of 2012, down from 16.4 days in the same period of 2011.

While the average time to pay claimants for a repairable claim (11.8 days) decreased by 1.3 days from the fourth quarter of 2011, the largest decrease is in the time it takes to pay total-loss claims, down by an average of 5.1 days to 18.5 days.

Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, commented:

Regardless of the claim type, the faster the claimant is paid and can move forward with a repair or to replace their vehicle, the more likely they are to be satisfied.

In addition, satisfaction with the claims professional is at an all-time high, indicating that the process is becoming smoother, with more frequent updates throughout contributing to a much more satisfying experience.”

The study measures claimant satisfaction with the claims experience for auto physical damage loss. Depending on the complexity of the claim, a claimant may experience some or all of the following, which are measured in the study: first notice of loss; claim service interaction; damage appraisal; repair process; rental experience; and settlement.

The 2013 U.S. Auto Claims Satisfaction Study–Wave 1 is based on responses from more than 3,000 auto insurance customers who settled a claim within the past six months. It excludes claimants whose vehicle incurred only glass/windshield damage or was stolen, or who only filed roadside assistance claims.

Check out this I.I.I. video for five steps to follow to make the auto insurance claim process quicker and simpler.

A new report from the National Insurance Crime Bureau (NICB) has found a strong correlation between organized crime and staged auto accidents.

Covering the period from January 1, 2008, through June 30, 2012, analysts reviewed 13,014 questionable insurance claims.

Questionable claims (QCs) are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons.

For this report, just QCs with a referral reason of “organized group/ring activity” (OGA) were identified.

Overall, there were 13,014 OGA QCs referred to NICB during this period. The top five states that generated the most were: Florida (3,530), California (2,679), Michigan (1,080), Texas (1,050) and New York (765).

The top five cities generating the most were: Los Angeles (752), New York (595), Miami (575), Detroit (545) and Tampa (545).

The insurance policy type most represented in the NICB analysis was “personal automobile,” accounting for 10,659 referrals. NICB says:

This suggests a rather strong correlation between the kinds of alleged fraud schemes most perpetrated by OGAs —staged and caused accidents.”

Further proof of this connection is evident when looking at these QCs by loss type. The referral reason most often coupled with the OGA referral was by far “staged/caused accident” — indicated 4,347 times. The loss type with the most referrals was bodily injury with 4,401 referrals.

NICB notes:

The results of this QC analysis correlate with what NICB agents and analysts are seeing in their cases—particularly in the no-fault, personal injury protection (PIP) states like Florida, Michigan and New York.”

The NICB defines organized crime groups as “any specific group made up of entities and/or individuals who systematically and repeatedly conduct pre-planned activities for the purpose of generating fraudulent insurance schemes.”

Staged/caused accidents are perpetrated by individuals who are skilled in committing insurance fraud. Those “accidents” set the stage for subsequent acts of fraud ranging from faked or exaggerated injuries to unnecessary or excessive medical treatment.

Check out this I.I.I. backgrounder for more info on no-fault insurance fraud, and insurance fraud in general.

Thanksgiving – the holiday of turkey, shopping, football, and for many Americans, travel.

The AAA projects 43.6 million Americans will journey 50 miles or more from home during the Thanksgiving holiday weekend, up 0.7 percent from the 43.3 million people who traveled last year.

This is the fourth consecutive year of growing holiday travelers since 2008 when Thanksgiving travel fell by 25 percent. It remains to be seen what impact Hurricane Sandy will have on travel from the Mid-Atlantic region.

While stories of air travel often dominate the news, in fact the AAA says some 90 percent of travelers, or 39.1 million people plan to travel by car this Thanksgiving.

The Wall Street Journal Driver’s Seat blog has more on this story.

If you’re renting a car for your holiday travel, the Insurance Information Institute (I.I.I.) has tips to make sure you’re properly insured.

Highway safety facts+stats from the I.I.I. also show that 50 more people die in traffic crashes during Thanksgiving week than during other weeks of the year, according to a University of Alabama study. Speeding, alcohol, time of day, weather, factors that affect crashes all year, are exaggerated during the holiday.

To all our readers, safe travels and Happy Thanksgiving!

Good news for drivers. Just-released analysis from the Insurance Information Institute (I.I.I.) projects that the average expenditure on auto insurance today is lower than it was in 2004.

The ability of insurers to better assess risk has led to more competitive marketplaces and as a result for many drivers auto insurance expenditures have dropped, the I.I.I. says.

The average annual expenditure for U.S. auto insurance coverage this year is expected to total $839, less than the $842 the typical U.S. driver spent for coverage in 2004, according to I.I.I. forecasts.

When adjusted for inflation, auto insurance expenditures are expected to be 19 percent lower in 2012 than in 2003 and lower than at any point in nearly 20 years.

Dr. Robert Hartwig, president of the I.I.I. explains:

Auto insurers have made great advances in their ability to assess risk and this trend, along with innovative new products, such as pay-as-you-drive policies, has resulted in highly competitive auto insurance markets in every state. Consumers have never had more options in terms of the number of insurers competing for their business, offering them an unprecedented ability to compare prices, shop and save.”

More from the I.I.I. on what determines the cost of your auto insurance policy here.

An estimated 7,630 people died in motor vehicle traffic crashes in the first quarter of 2012, a 13.5 percent increase on the same period of 2011, according to analysis from the National Highway Traffic Safety Administration (NHTSA).

Preliminary data reported by the Federal Highway Administration (FHWA) shows that vehicle miles traveled (VMT) in the first three months of 2012 increased by about 9.7 billion miles. The fatality rate for the first quarter of 2012 increased significantly to 1.10 fatalities per 100 million VMT, up from 0.98 fatalities per 100 million VMT in the first quarter of 2011.

The NHTSA says it’s too soon to speculate on the contributing factors or potential implications of any increase in traffic deaths.

However, two key takeaways from the NHTSA report are:

– The historic downward trend in traffic fatalities in the past several years – a pattern which has continued through the early estimates for 2011 released recently that show deaths at a 60-year low – means any comparison will be to an unprecedented low baseline figure.

– The rate for the first quarter each year is traditionally significantly lower than the rates for the other three quarters, potentially due to, but not restricted to, the effects of winter weather. However, the winter of 2012 was also unseasonably warmer than usual in most areas of the country. Consequently, the fatality rate for the first quarter should not be used to make inferences for the fatality rate for the whole of 2012.

A report over at CNN.com quotes a safety expert at the Automobile Association of America (AAA) agreeing that the warmer winter weather may have contributed to higher vehicle miles traveled and ultimately more fatal crashes.

AAA also tells CNN that more work needs to be done to improve driver safety.

More facts and statistics on highway safety from the I.I.I.

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