Why Are Fewer Consumers Shopping Their Auto Insurance?

May 9, 2012 No Comments »
Why Are Fewer Consumers Shopping Their Auto Insurance?

Our friends at JD Power and Associates recently conducted a survey that revealed fewer insurance consumers shopped their auto insurance in 2011.

That made us wonder what was behind the decrease. We at TTAI think the phrase is called “tired-head.”

If you’ve ever been around children, you may have experienced the moment when a little one has simply had enough and can’t concentrate anymore…queue the YouTube video of a toddler falling asleep while eating an ice cream cone.

But what’s behind this case of adult tired-head?


[Compare rates from the leading car insurance companies in your area.]

Save Hundreds by Switching

If you haven’t heard that phrase before, congratulations on purchasing your first television, radio and computer today!

Insurers spent $5.7 billion dollars on advertising in 2011 to get us to shop our rates, per JD Power.

Our guess is that $5.69 billion of that was spent on advertisements touting the hundreds of dollars in savings you’ll enjoy by switching auto insurance carriers.

[Which insurance company spends the most on advertising?]

Let’s face it; we’re all tired of hearing how we can save hundreds by switching. The reality appears to be that everyone who is interested in leaving their current insurer has already received quotes and done so.

This concept is supported by the findings that even though fewer people are shopping, a greater percentage than ever are still making the move after they shop.

Here’s why. The first several million people who listened to those commercials made the switch and realized that once you save the initial couple hundred dollars, you’ve reached the bottom and there is no reason to continue shopping.

Customer Loyalty = Fail

The longer you stay loyal to a particular insurer, the higher the likelihood you’re overpaying for insurance (at least in a soft market, which we have been in for years).

The first insurance company to advertise the “switch to save hundreds” concept started the revolution, which would not have been possible without the ease of getting insurance quotes via the Internet.

Insurance companies, like cable and mobile phone companies, are always offering lower rates to new customers, but your premium tends to stay the same or increase…right?

Well, if you simply paid your renewal premium every year for the past five to 10 years without asking any questions (or listening to your insurers TV advertisements telling you how good of a deal you’re getting), you’re probably overpaying.

All you have to do to get the “new guy” rates is to be a “new guy” to a different insurer. You are now paying the “going rate” for coverage…not the same old rate from years past.

Common sense tells you it is not possible to simply be the “new guy” every year and reduce your insurance costs by 50% each time…thus the fact that less people are shopping now.

Most of us already got the memo and realized we were paying too much and switched, and subsequently recognized there was not much lower we could go.

Something to Think About

If you are one of the last people who still believes an insurance company that has the most television commercials must be a better insurer, it’s time to wake up.

The JD Power survey clearly points out that even though there are less shoppers overall (most have already made the switch), a higher percentage of those who do shop are saving money.

But don’t take it from us. Take it from the insurers who are still spending $5.7 billion dollars on advertising to help you figure out that.

You should shop your rate at least once every two years to ensure your insurer is not giving the best deal to the “new guy.”

Read more: How are car insurance rates determined?

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