J.D. Power: Auto insurance switching at ‘all-time high’
Auto insurance carrier switching is at an “all-time high,” according to J.D. Power’s Q3 Insurance Shopping Loyalty Indicator and Shopping Trends (LIST) report.
Switching rose to 4.5% during the quarter, up 0.3 percentage points quarter-over-quarter (QoQ) and year-over-year (YoY). Among those who switched, the average amount of premium moving carriers is more than $4,500
Shopping increased only slightly, by 0.2 percentage points QoQ and no change YoY.
“The auto insurance market from 2021–2024 saw historic rate increases, which drove many consumers to sho,p but those consumers could not always switch, as it was difficult to find a more competitive premium for auto insurance when most or all insurers were increasing rates,” said Stephen J. Crewdson, J.D. Power’s managing director of Global Business Intelligence – Insurance.
“Beginning in the second half of last year, rate increases started to cool off. So, more consumers now can find a lower premium when shopping, which has driven up switch rates and has also contributed to more younger consumers shopping, as younger consumers tend to be more price sensitive when it comes to auto insurance.”
Auto insurance shopping activity increased during Q2 compared to Q2 2024, up 18%. Growth in auto shopping peaked in March before retreating slightly in May and June.
According to the report, Gen Zers continue to be the No. 1 shoppers for auto insurance.
Insurance and AI
According to a recent J.D. Power survey, more than 41% of consumers used an AI tool in the shopping or insurance research process.
Among those who used an AI tool, 80% felt it was either very or somewhat helpful in their shopping process, J.D. Power said.
Sixteen percent of respondents said they were unsure if they could trust or follow AI’s recommendation.
The National Association of Mutual Insurance Companies (NAMIC) released a report earlier this year that warns of myths that could be influencing regulations on the use of AI and emerging technology in the insurance industry.
“Particularly prevalent in insurance policy are myths about the effects of insurers using big data and artificial intelligence and unfounded notions about how insurance pricing should operate considering the argued effects,” the report says. “The danger in these myths is that there are growing numbers of advocates and regulators relying on them to advance policy that would ultimately harm the very population they are looking to protect: policyholders.”
AI creates systems and models that provide insights into data and are capable of providing or generating new content based on those insights and learning from large data sets, the report says. It adds that advanced data processing is beneficial to the insurance industry because it brings the prospect of increased risk insights and increased precision in risk-based pricing, which strengthens competition and benefits consumers.
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