Poor service -- more than price -- prompts people to leave their auto insurers and shop for coverage elsewhere, according to a report from J.D. Power.
About 13 percent of customers hit with rate increases shop around for new insurers, compared to 28 percent who had a poor experience.
Price is still a big factor in which car insurance companies consumers select, though. The "2014 U.S. Insurance Shopping Study" found that eight in 10 customers choose the lowest-priced insurer. But some customers find the price breaks aren't as good as they expected. Declining satisfaction with pricing is the biggest reason customers are less satisfied when they switch insurers.
"The insurance industry spends billions of dollars each year on advertising, and over the last seven years many of those ads have tried to entice customers with big savings," Jeremy Bowler, J.D. Power's senior director of the insurance practice, said in a press statement. "While switching to a new insurer usually results in savings, the ads make promises of savings that a growing number of new customers don't believe they've received."
On average, customers saved $300 when switching insurers in the past 12 months. The longer customers had been with their previous insurer, the greater the savings when they switched carriers. This is probably because they had been seeing their rates go up, according to the J.D. Power report. Customers who were with their prior insurer for 11 years or longer before switching saved an average of $426 per year on their premiums, compared with $291 among those who had been with their previous insurer less than two years before switching.
Insurers that satisfy their customers in the first year see fewer of those customers walk out the door. Among customers who are highly satisfied in their first year with an insurer, 41 percent shop other insurers and 81 percent ultimately remain with that insurance company. Among customers with lower satisfaction in the first year, only 61 percent shop around and 61 percent remain with the insurer.
The study found that 30 percent of auto insurance customers overall shopped for a new insurance provider in 2013, and among them, 36 percent ultimately switched insurers.
According to J.D. Power's customer satisfaction scores, Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience, with a score of 843 on a 1,000-point scale. MetLife and State Farm rank second in a tie at 839, while American Family and Ameriprise rank fourth in a tie at 835.