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J.D. Power Study: Retention Rates Critical to Carriers

While the majority of auto insurance customers stick with their carrier, many customers shop for insurance, and keeping current customers is critical to the long-term...
April 28, 2009

While the majority of auto insurance customers stick with their carrier, many customers shop for insurance, and keeping current customers is critical to the long-term health of insurers, a J.D. Power and Associates survey finds. The study found that income and demographics play critical roles in customer retention, even though the vast majority of people remain with their carrier.

J.D. Power said the survey found 30 percent of households with annual incomes below $50,000 shopped for a new carrier, and 45 percent of those customers eventually switched. By contrast, only 26 percent of those making $100,000 or more shopped for a new carrier, with only 31 percent making a switch. Retention rates averaged 95 percent among those customers who bundled their home and auto polices and 92 percent among those who bundled their auto and rental policies. The retention rate was lower for mono-line auto customers at 83 percent and 85 percent for those who chose not to bundle.

Len Brevik, executive vice president and CEO of PIA National, commented on the study for the National Underwriter. "These survey results identify another compelling business opportunity for Main Street agents," he said. "As carriers seek to improve their retention rates in this increasingly competitive environment, the independent agent system provides the most effective and efficient distribution channel for their products. And when times get tough, consumers seeking the best value for their insurance dollar can find it by consulting a Main Street insurance agent."

Retention Rates Critical To Insurance Company Future (National Underwriter 4/22/09)

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