Auto Insurance Customer Loyalty Is Declining. Here’s Why.

By | October 15, 2019

  • October 15, 2019 at 10:58 am
    Mr. Solvent says:
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    This isn’t rocket science. Rate change is the real reason loyalty is low and that goes for increases AND decreases. When consumers see any substantial change this $6 billion in advertising becomes effective and they shop. I can’t believe they have people making millions of dollars as consultants who can’t figure this out.

  • October 15, 2019 at 12:08 pm
    Tiger88 says:
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    Mr. Solvent is correct. It is the wild swings in pricing that cause the loyalty to greatly diminish. In my case, in the last 10 years I have had my auto insurance with Progressive, Safeco (twice), Mercury, Travelers and now Auto Owners. I am very loyal to every one of these companies. But, i get $1,000+ increases every few years. Example: Safeco went up $1,200 this year. I switched to Auto Owners and lowered my rate (from the expiring) by $350, essentially a $1,550 swing. Why did it change that much? I don’t know but it’s hard to be loyal with extreme changes in the numbers.

    • October 28, 2019 at 1:11 pm
      Tom Andrews says:
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      Maybe because Safeco made you buy more coverage than you really need…… as opposed to Liberty Mutual who allows you to buy only the coverages that you need!!! But that simpleton ad is probably successful in 2 ways. It is different than the save, save, save advertising out there. Second, since the normal prospect does not know what he/she really needs, it forces them to talk to an agent which is the only way to combat “the lowest price is the only thing that will do” advertising.

  • October 15, 2019 at 1:25 pm
    Rosenblatt says:
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    While I definitely agree that pricing is a major factor in loyalty, I think this article left out another big driver: the customer’s claims experience. Regardless of my insurance rate, if my adjuster never returns my emails, never calls me back, or doesn’t explains why my payment is lower than the estimate (aside from the deductible – say LKQ parts vs OEM parts or how Recoverable Depreciation actually works), or doesn’t take the time to explain why I was found at-fault for an auto accident, I’d rather pay more in premium to have a carrier who is there for me when I need them. Sure, rates are a major driver, but I think the metal-meets-the-road when a loss is actually filed too.

    • October 15, 2019 at 1:51 pm
      SAK74 says:
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      I completely agree with you on this! I have been with the same auto insurer since 2005. I know I can move my coverage elsewhere for less (especially with a teen driver) BUT any time I have an issue with my policy be it a coverage question, billing, claims, etc they are there and make sure I walk away from the issue happy. Plus I do call in to a call center however each rep has always greeted me in a warm friendly manner addressing me formally and asking if they can address me informally so I feel like I am important to them. To me the little bit extra I pay in premium is so well worth that.

    • October 18, 2019 at 8:57 am
      Smooth says:
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      I agree with this as well. Rate is the primary driver for most people, but I think the claims experience is the motivating factor for me. I have been with State Farm since I was 16, so 29 years now. I would assume I could find a lower rate, but they have always done right by me. Twice I’ve had vehicles that were a complete loss from accidents, neither of which were my fault. In one instance, a guy was texting his wife and took out the entire back half of my SUV. His low-budget insurance company was balking at paying what my vehicle was worth. State Farm stepped in and paid me, then went after his carrier for the reimbursement. I’ve had friends with low-cost car insurance that have been in similar accidents and they have definitely not had the same treatment. Way back in 2004, I had a vehicle totaled in a hail storm. They gave me nearly $2,500 over the KBB value of the car. For these reasons, I have never given any thought to leaving. The bill comes in, I pay it and don’t think twice about it. As a family, we’ve never seen drastic rate increases or decreases. My insurance rates have been steady. I may see a $15 increase one year, but usually the following year it’s down by the same amount. Saving a few hundred dollars a year and losing the service I receive just isn’t worth it to me.

    • October 18, 2019 at 10:56 am
      Rosenblatt says:
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      Why I’d love to know why someone downvoted my comment, it seems the general consensus is that while rates are obviously important to loyalty, people who have had claims understand that the carrier fulfilling its promise and handling the claim properly is a huge driver of loyalty too. You get what you pay for … that’s not always true, but when it is, it’s “easy” to justify the extra cost.

  • October 15, 2019 at 1:28 pm
    Jack says:
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    Mr. Solvent- Those same consultants and the carriers know they can jack rates up and a customer may not catch it on the first renewal. I can move a client from one carrier for 6 months and then move it back to the same carrier 6 months later for a lower rate. Pain in my ass and the clients. It’s about profits, carriers don’t care about loyalty, they want you to think they do.

  • October 15, 2019 at 2:17 pm
    Charles Ford says:
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    Auto has seen rate increases over the last ten years that have a different pattern than in previous periods. Cars have become computers on wheels. Windshileds that once cost $100 now run $700 or more. The front bumper nose is a computer hardware location. This has caused increased costs and rates have folowed thus stimulating search for price that has stability.

    • October 18, 2019 at 9:04 am
      Smooth says:
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      Charles – You are exactly correct. I had to have the windshield replaced in my vehicle. A rock from an 18 wheeler flew up and instantly the entire passenger side was a spiderweb of cracked glass. The last time I had a windshield replaced was probably 20 years ago. I think I paid around $165. On my new car, because of the sensors in the windshield, it was $800. I didn’t turn it in to insurance though. The place that changed the windshield said they see new vehicles coming in now that are regularly $1,100 – $1,200 for a replacement. As you said, it’s a computer on wheels and insurers are struggling to find the correct pricing point.

  • October 15, 2019 at 3:31 pm
    Retired Agent says:
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    I have been with the same carrier for over thirty years. Chasing rate has never worked in the long run. However, EVERY company has bought into “Big Data”. The companies are looking to have as little human interaction with the insured as possible and then they cry about loyalty. I took every opportunity to talk to my customers. We took premium payments and always tried to be available. My home phone (yes a land line!) was on my business card. When I looked at police accident reports the name of the insurance company was usually our agency name. I could care less about carrier loyalty. I wanted agency loyalty!

    • October 17, 2019 at 12:14 pm
      Captain Planet says:
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      Just curious here, but you never felt a partnership with any of the carriers you worked with? That’s sad. It should be a 3 footed stool in which everyone benefits and wins together; insured, agent, and carrier.

    • October 21, 2019 at 7:34 am
      knowall says:
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      As retired agent stated, the old style agency had regular interaction with much of their book. The company reps often taught you to leverage that interaction into cross sales such as life or retirement products. The foot traffic is definitely down, with the payment technology and scanning etc… It’s understandable why the companies are using the analytics to set rate, but if that were the main factor why do most people still use agencies? I guess that they want service when needed, something a far away company cannot deliver.

  • October 15, 2019 at 3:45 pm
    Texas says:
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    Interesting because my carrier has been pushing Net Promoter Score for the last few years.

  • October 16, 2019 at 9:26 pm
    knowall says:
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    Obviously the cost of claims has raised the rates but I do remember when they started doing credit scoring people with related issues, BUT NO CLAIMS HISTORY, started shopping. Many of these folks were hard working and honest people who felt their long term loyalty to the same company had been betrayed.

  • October 17, 2019 at 9:31 am
    richard calfa says:
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    Unfortunately, price over substance continues to govern the marketing and purchase of insurance until substance is found to be wanton and finance disappointment occurs. So is it the basis for marketing the concept of risk management with insurance companies and agents, forgetting the intent or degree of professional involvement needed toward serving the public. In response, we can only work toward seeking appreciation for our efforts.

  • October 17, 2019 at 12:46 pm
    oak says:
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    wow

    • October 20, 2019 at 12:02 pm
      Agent says:
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      Millennials will change for a dollar every 6 months.

      • October 22, 2019 at 11:46 am
        okt0ber says:
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        Yes, they definitely will! The majority of them, not all, but unless I am writing multiple policies, I try to steel clear unless I have a personal friendship or it’s a referral of some sort. I also see that they regularly let their insurance lapse and don’t see the problem with it.

  • October 21, 2019 at 10:43 am
    Kirk Reisner says:
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    Don’t forget carrierers are doing the best job ever of teaching clients to shop. Everyone offers a early rate discount that falls off in 2,3, or 4 years at longest. So what do you do when it falls off? You shop and get another early quote discount.

  • October 21, 2019 at 1:48 pm
    jestr says:
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    As a small agency, we gave up on Personal Lines Insurance several decades ago and went completely commercial. Personal Lines is a loser as there is no loyalty and the companies consistently kept cutting our commission rates. Best move we ever made!

    • October 22, 2019 at 11:48 am
      okt0ber says:
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      You’re partially correct, but I’m definitely starting to see this behavior in small commercial lines, too. Especially commercial auto.

  • October 21, 2019 at 1:49 pm
    Les says:
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    I left Amica after 10 years–my new policy incepted today. I loved the service, but the increases became too much to stomach. I moved home/auto/umbrella and saved over $2,000/yr. Good service kept me through several premium increases, but everyone has his breaking point.

  • October 22, 2019 at 2:08 pm
    A Barbara Dorsey says:
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    Save Save save is the message. Reinforces the product as a bill. Does not portray the benefits of insurance which perpetuates an already negative image. New business is the least profitable and not just the acquisition-wise, you have to consider the loss ratio. Frequency is historically higher for new business. Driving the average price down is just stupid.

  • October 24, 2019 at 9:10 am
    agent14 says:
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    The carriers are now like a snake eating its own tail: It is a race to the bottom. They thought they were clever making it “easy” to switch to them. However, it is just as easy to leave them. Too much focus on rate, rate, rate. Carriers are selling below claims costs in most cases to acquire new business. Then they have to adjust rates later on. Clients come and go as a result.

  • October 28, 2019 at 10:29 am
    Billy Bean says:
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    The thing about shopping that I really don’t like is carriers like SF saying that you can insure a $500k home for $350k and it’s fine. Or you don’t need $500 CSL on your autos – 100/300/100 is just as good etc. We do a disservice to clients when we tell them that and I see it a lot. But the BIGGGES issue is UM/UIM. Why do we as an industry allow carriers to write 25/50/25 coverage? Why? I don’t understand the “Cheapness recommends it” garbage. People need better coverage than that and we all know it.

  • October 28, 2019 at 4:41 pm
    Liz Serda says:
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    In Louisiana, due to an exhorbitant amount of plaintiff lawyers just saturating our airwaves with commercials “pick me”…the litigious nature of people in Louisiana with their aching backs and necks for a fender bender…Louisiana residents are hit with the highest auto insurance rates in the country and as long as the insurance company coalitions get blocked by the plaintiff bar and their lobbyists at legislation time…we will be poor residents at the mercy of the professional plaintiffs padding the pockets of the plaintiff bar. I’ve been in this business as an insurance adjuster for almost 30 years and working for a law firm now. I don’t see anything changing. I definitely change insurance companies every couple of years to save the money. I have bills to pay the real way, by working a full time job and not being rear-ended or slipping in a store.



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