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A recent J.D. Power and Associates study found that, for the first time, the majority of auto insurancebuyers initiated their policy purchases online. The importance of insurers’ websites has been growing for the past five years, but this is the first time that over 50 percent of new policies inquiries were started on the Internet.

The numbers show that consumers are not only growing comfortable researching and purchasing online, but also that they are shopping for lower car insurance rates more often and switching insurers with greater frequency. J.D. Power found that of the insurance customers who shopped around in 2011, 40 percent switched to a new insurer, up 33 percent from 2010. This shift in customer behavior has ramifications for both customers and insurance agents.

online auto insurance quotesThere are three key reasons that consumers are shopping more frequently for insurance online.

1. Increased car insurance advertising

Insurance companies have dramatically increased their marketing and advertising in recent years. According to Jeremy Bowler, senior director of the global insurance practice at J.D. Power, “In 2010, the insurance industry spent $5 billion on marketing and advertising. Insurers have increased their ad spends to dislodge longtime customers — those policyholders who rarely shop around and have not changed carriers in years.”

According to the data, this strategy is working.

2. Convenience

Shopping for car insurance quotes from the comfort of your living room is convenient. According to a 2010 report by comScore, the main reason that shoppers chose to bypass an agent was the convenience of using a website or a 24-hour toll free number. While young drivers are most likely to shop online, older Americans are jumping in as well. According to Michelle Polo of comScore, “About half of online shoppers are age 25 to 44, and while 55-plus are the least likely to buy online, we have seen an increase in older online quoters.”

3. Time savings

While some insurers offer a small discount for buying a policy online, the perceived value of online shopping for consumers lies in the time saved and the ease of use.

Elena Tchijov of Silver Spring, Md., recalls that she spent a couple of hours researching insurance online for her 1992 Porsche 968, but just to be safe she also contacted an agent.

“I spent about four hours in total talking with the agent and he produced the same quotes as I got online,” she says. “Basically, he presented me with the information I already knew. I just felt that I completely wasted four hours.”

Easier to do it yourself?

A common complaint among consumers is that agents attempt to add coverage that they do not need.   

“Unlike an agent, an online form does not want me to know that for just $5 a month more I can get this or that,” says Tchijov. “Since I knew perfectly well what I wanted and needed, I felt it was much easier to do it myself online.”

Insurance agents still provide value

Despite the growing popularity of online shopping, insurance agents still have the upper hand when it comes down to the actual purchase. Over 50 percent of quotes initiated online were eventually closed by an agent or call center representative, according to the J.D. Power report.

“A majority of the customers are using the insurer websites to do research and fact finding as well as some basic pricing,” says Bowler. “After they narrow their choices down they often switch to the more traditional route of contacting an agent to actually purchase the policy.”

ComScore research confirms this. Their survey showed that 78 percent of consumers still are doing their actual buying offline. “While it has decreased somewhat over the past few years, purchasing through a local agent is still currently the No. 1 way consumers purchase auto insurance and wanting to speak to someone in person is overwhelmingly the No. 1 reason why,” says comScore’s Michelle Polo.

Robert W. Gilbert, CEO of The Dowd Agencies, agrees with this assessment. “The predominant advantage to working with an agent is appropriate advice,” he says. “An agent can help uncover exposures and coverage needs that may be missed in an online quote.”

This doesn’t mean that agents are not taking advantage of this growing trend; independent agents are creating more sophisticated websites to draw in customers and provide quotes online.

How does this affect you?

All of this is good news for consumers. The convenience of shopping online makes it easier to check your auto insurance rate on a regular basis, which will almost always result in savings. Insurers and agents alike are taking notice of this trend.

“Allstate’s multichannel model helps us serve different consumer segments who want and expect to learn, interact and shop with Allstate in their own way,” says spokesperson Meghann Dowd.

The numbers show that this trend towards online buying will continue. When comScore asked consumers how likely they would be purchase auto insurance online in the future, 35 percent said they were likely to do so, a 7 percent increase over the previous year.

Auto insurance shopping tips

Here are some tips for successful online shopping:

  • Shop for rates once a year. Car insurance companies price risk differently, so one insurer may penalize you for a speeding ticket while another may not. The savings can be dramatic.
  • Familiarize yourself with the different types of insurance and know which coverage you want and need before you start shopping.
  • Get lots of quotes. This is the best way to save money. Premiums can vary dramatically between insurance companies. However, make sure you are comparing apples to apples (in terms of coverage amounts) when evaluating prices. 
  • Be honest. Being less than honest on your application may get you a better quote but could jeopardize a claim if your insurer finds out about the misrepresentation.
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Mark Vallet
Contributing Researcher


Mark is a freelance journalist and analyst with over 15 years of experience covering the insurance industry.