Auto insurance rates are being hit hard by a cycle of rising payouts due to inflation, leading to soaring premiums and increasing cross-shopping by customers.
The result, according to the J.D. Power 2023 U.S. Insurance Shopping Study, released today, is “an increased focus on saving money as large numbers of auto insurance customers shop for new policies and switch to new carriers, largely based on price.”
“Auto insurance customers are starting to shop for insurance like they shop for gas,” said Stephen Crewdson, senior director, insurance business intelligence at J.D. Power.
“They are taking a much more active stance in seeking out plans that fit their needs and their budgets, which could have a serious long-term effect on carriers that have been working for years to build lifetime value through bundling and other initiatives. In the near term, this shopping trend manifests itself in increased customer interest in usage-based insurance (UBI) plans and some reshuffling of market share among the top carriers.”
This is not new technology. For nearly a decade, Progressive Insurance has offered policyholders the opportunity to install a device in the vehicle’s OBD-II diagnostic port that tracks their driving behavior and adjusts the rate accordingly.
Other insurers followed, teasing drivers with the potential for slightly lower rates, while hiding the likelihood of higher rates based not on claims history, but on driving patterns.
Your car can report on your driving
TheDetroitBureau.com has previously reported on this coverage strategy, highlighting the potential for reduced insurance rates based on vehicle telematics reporting. At least 17 automakers have introduced these insurance packages, all of which