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J.D. Power Ranks Insurers; Eerie Tops List of 18

Erie ranks highest among 18 major auto insurance companies in satisfying new buyers, according to a new study from J.D. Power and Associates released yesterday.

The study examined the purchase behaviors and overall satisfaction of buyers who shop for a new auto insurance company. The following factors were measured to determine overall satisfaction: distribution channel), price and policy offerings.

Erie ranked highest in the study with a score of 896 on a 1,000-point scale, performing particularly well in the price factor.

The Hartford closely followed behind Erie in the rankings with a score of 894, while State Farm ranked third overall at 893. According to the study, State Farm performed particularly well in both the distribution channel and policy offerings factors.

"The shopping experience is the first opportunity that an insurer has to meet or exceed the expectations of prospective buyers," says Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. "The growing convenience of obtaining quotes, particularly online, makes shopping and switching increasingly simple. As a result, insurers who disappoint buyers during the shopping and sales process run the risk of losing sales from potential new customers and of losing renewals from existing customers."

The study finds that while 55 percent of all new auto insurance sales are handled by local agents, the percentage of buyers shopping and closing via direct channels-which includes insurer websites and call centers-has increased from the 2007 study. In 2008, 44 percent of buyers who bought auto insurance from a new insurer purchased directly from the insurer, rather than through an agent-an increase of 3 percentage points from 2007. Additionally, among buyers who changed their shopping channels, more buyers changed to direct purchasing methods (22 percent) compared with those who switched to using an agent (15 percent), according to the study.

"The study results indicate that a growing number of insurance shoppers are buying auto insurance online," said Bowler. "In 2008, sales transactions processed entirely on the web now account for 21 percent of all new-customer insurance sales."

However, the study found that buyers who purchase their auto insurance policies through local agents give significantly higher average satisfaction scores compared with those who purchase policies from call center representatives or via Internet channels.

The study also found the following insurance buying trends:

  • The rate of switching insurers has increased-up from 33 percent in 2007 to 39 percent in 2008.
  • Fourteen percent of customers initiated the shopping process because of a poor customer service experience. Among them, 73 percent switched insurers.
  • In the past 12 months, 36 percent of customers requested an insurance quote, marking a 5 percent increase from 2007.
  • Serial shoppers, defined as those customers who have shopped three or more times for auto insurance in the past three years, represent slightly less than one-third of all auto policy shoppers.
  • While the average insurer will close 18 percent of its quotes, close rates range from 9 percent to 38 percent among insurers profiled in the study.

The 2008 Insurance New Buyer Study is based on responses from 8,452 consumers who requested an auto insurance price quote from at least one competitive insurer in the past 12 months and includes evaluations of 17,677 unique carrier quotes.

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