More than one-third of customers are interested in purchasing insurance directly through auto dealers according to J.D. Power’s U.S. Insurance Shopping Study. This concept is known as embedded insurance and particularly attracts Generations Y and Z with 47 percent showing interest.
This trend appears just as auto insurance premium increases have finally slowed after multi-decade highs during the first quarter of 2024. That has yet to sway customers though, who are policy shopping now more than ever. Despite the slowdown in the rate of increase for insurance premiums, 57 percent of auto insurance customers are actively shopping for new policies. That is an increase from 49 percent a year ago and a record high in the study’s 19-year history. However, the number of Americans still scouring the market for new policies is likely to drop in the coming months.
“As rate activity began to fall in the second half of 2024, many shoppers were successful at finding lower-priced policies,” said Stephen Crewdson, managing director of insurance business intelligence at J.D. Power. “That combination of increased shopping and less rate taking created a bit of a snowball effect for much of the year, but we are seeing signs that shopping rates are starting to normalize. A potentially bigger concern for the industry right now might be the increased interest many consumers are showing in embedded insurance providers, like auto dealers, financing companies and manufacturers.”
What Customers Are Looking For
After drivers were faced with record rate hikes in 2024, many were sent scrambling for more affordable options. They’re not just looking for a cheaper policy though, plenty of other benefits are appealing to shoppers such as insurance bundles. Bundling your auto insurance with other policies like a homeowner’s policy can be a solid money-saving technique. 33 percent of shoppers are looking to bundle, and those who do, tend to stay with their insurers longer. On average they stay for seven years instead of five and a half years for non-bundlers.
Embedded insurance is increasing in popularity as well with 37 percent of customers interested in getting auto insurance straight from a dealer or manufacturer. It is particularly favored by those whose primary reason for shopping for a new policy is service. Usage-based insurance, which calculates rates based on individual driving behavior, is also regaining momentum. While the offering is still down from 2023, it is currently at 17 percent, up from 15 percent in 2024.
Top Auto Insurance Rankings
For the second consecutive year, Erie Insurance holds the crown among large auto insurers ranked in J.D. Power’s study with a score of 714. It was followed closely by ACG (AAA) and State Farm with scores of 707 and 699 respectively. These companies are leading the charge in customer satisfaction and providing competitive rates that attract and retain customers.
The J.D. Power U.S. Insurance Shopping Study, now in its 19th year, captures advanced insight into each stage of the shopping funnel and is based on responses from 12,720 insurance customers who requested an auto insurance price quote from at least one competitive insurer in the previous six months. The study was fielded from April 2024 through January 2025.
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