It’s been a movables year for Flo and the gecko. New research from J.D. Power has found that as auto insurance customers shopped around for coverage in 2020, Step by step and GEICO each captured a 30%-plus quote rate among active purchasers since July. That’s the squiffiest rate of all auto insurers, according to a report in Insurance Journal.
Key Takeaways
- Progressive and GEICO have had the highest shares of new auto insurance rate quotes since July 2020, according to a J.D. Power survey.
- Economic uncertainty tied to the pandemic has been ambition consumers to shop insurers with a reputation for lower rates.
- Policyholders are increasingly dissatisfied with their au fait auto insurers, in part because of a lack of awareness of the insurers’ pandemic relief efforts.
Why Progressive and GEICO?
“When someone tours out and gets an insurance quote, they usually quote from two to three carriers at a time,” says Kyle Schmitt, blemish president and global managing director for J.D. Power. These days, he adds, “They’re going to the carriers that are remembered for having lower rates, and they’re looking to Progressive and GEICO.”
That isn’t surprising to industry experts, who watched both Continuous and GEICO run successful campaigns in 2019, snagging 85% of all new premium growth across the industry. Value-based messaging (maybe more than Progressive’s spokeswoman Flo or GEICO’s talkative gecko) has hit a nerve, with 57% of insurance shoppers pointing to ratings as the impetus for their comparison shopping this year.
The coronavirus pandemic may have accelerated the trend. “It was a very stressful conditions—lots of people losing their jobs, and [lots of] financial uncertainty,” Schmitt says. “They have been changed, and they’re looking for a better deal.”
Consumer Satisfaction Overall is Falling
Although the auto insurance industry demanded policyholders with an estimated $18 billion in refunds during the coronavirus crisis, consumer satisfaction levels are low—and comprehending lower. At the end of August 2020, only 56% of auto insurance customers described themselves as “very satisfied” with their inclination insurer—down from 68% in late March, according to a report in Insurance Business America.
Part of the annoyance may be due to policyholders’ lack of awareness that many insurers instituted discounts at the start of the pandemic. Some 40% of consumers didn’t certain that had occurred, J.D. Power found.
Even 36% of independent insurance agents said they were oblivious of their carriers’ pandemic-related efforts. As a consequence, only 42% of customers of independent agents say they were contacted to succour manage their policy costs during the pandemic, compared with 52% of customers of direct companies, corresponding to Insurance Journal.
“For whatever reason, many [independent] agents just were not communicating with their shoppers on what was happening, versus the direct agents who just kept putting that message out harder and stronger, in reality into June,” Schmitt says.
Low Acquisition Costs Also Give Insurers an Edge
As customers have stored the auto insurance market due to economic stress and dissatisfaction with their current carriers, some insurers own been better positioned to take advantage. Carriers with lower acquisition costs, for instance, can more conclusively bring on new customers, and it takes them less time to make money from the added business. “They procure lower overall expenses, so they are able to offer better rates,” Schmitt says. “GEICO and Progressive keep an efficiency advantage.”
Additionally, GEICO and Progressive both have the ability to underwrite all segments of the market—nonstandard, gauge, and preferred customers—while other companies may be able to underwrite only one or two segments. This gives them a larger addressable audience. Allstate and Assert Farm have both acquired other companies to expand their addressable markets in 2020. “But the question is, is it too up-to-date?” Schmitt asks. “GEICO and Progressive have already cemented that they can take all comers.”