- Discounts and relief offers from auto-insurance companies might not be enough for customers to remain with one insurance company or plan, a new J.D. Power study shows.
- Due to the economic uncertainty during the
COVID-19 pandemic, consumers are extra sensitive to their insurance rates right now. - This is especially so because of a decline in overall miles driven amid stay-at-home orders.
- Visit Business Insider's homepage for more stories.
As we march forth into what feels like Year 472 of the global COVID-19 pandemic, countless industries are affected and disrupted — the auto-insurance industry in particular.
A new study from market research company J.D. Power indicates auto-insurance companies need to figure out how to deal with all of this, and fast. Companies have offered things like refunds and discounts amid the pandemic, and some 7.7 million US consumers will also see their rates drop in the first half of 2020.
But that hasn't made people love the companies insuring them.
"
J.D. Power has conducted weekly pulse surveys since March 24 and collected more than 4,000 responses in total, with the most recent data being gathered through April 14. With heightened panic and uncertainty in the market, the study determined a few key trends as people abide by stay-at-home orders and take to the roads far less than they normally would.
Most customers apparently aren't even aware of the relief offers, for one, and the 37% who are don't see them as incentives to keep to the same insurance company. J.D. Power suggests the discounts aren't big enough to maintain customer loyalty, and that customers are more likely to shop around for a better deal, switch companies, or cancel their policies altogether.
Then, there will supposedly soon be a "surge" in shopping and switching. Peoples' satisfaction with and perceptions of auto-insurance companies are dropping, which is what drives them to find better deals elsewhere. J.D. Power found that only 34% of consumers are "very confident" of making their next payment, and the likelihood to shop or switch has more than doubled in the past three weeks.
As people endure hardship and personally difficult times, they are demanding access on their terms and when it's most convenient for them. Thus, J.D. Power concludes, it's important for companies to keep service levels and access consistently good during high call volumes. People will be less likely to switch if that happens.
"A whopping 40% of auto insurance customers say they are more willing to consider usage-based insurance last week — in which premiums are based on driving behavior and miles driven — due to COVID-19," according to J.D. Power. It's a figure that's nearly three times as high as it was three weeks ago.
Additionally, as miles driven stay low because of stay-at-home mandates, consumers will be especially sensitive to changes in their insurance rates. The economy also plays a factor — as it descends into further uncertainty and more and more people lose their jobs, they will probably also switch insurance plans and carriers quickly as well.
"Consumers in financial challenging situations will shop/switch quickly," J.D. Power reports.
You can read the complete J.D. Power study here.
Read the original article on Business Insider