J.D. Power data shows that the refunds and credits are increasing a policyholder’s odds of switching.
Across the country, insurers are offering their various versions of coronavirus auto insurance discounts. These are meant to help make sure policyholders aren’t paying more than what their risk level justifies as many people drive far less than they usually would.
A new J.D. Power study indicates that providing this savings is making customers more prone to leaving.
The study showed that the coronavirus auto insurance discounts are not improving customer loyalty. In fact, they are having the opposite effect. As there are about 7.7 million US customers currently receiving refunds, credits and other premiums reductions due to the pandemic, this trend reflects a potential risk to insurers that is far from small. Policyholders don’t appear to be feeling any warmer toward their insurers due to the savings.
“Auto insurance satisfaction levels continue to decline,” reported J.D. Power when it released its study results. “Customers’ initial satisfaction levels are fading toward uncertainty — based upon our historical consumer sentiment database, this almost always results in increased shopping activity.”
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The research into the impact of the coronavirus auto insurance discounts involved 4,000 participants.
J.D. Power has held pulse surveys every week starting on March 24. Since that time, it has collected a total of more than 4,000 responses. The most recent data was collected through to April 14. It reflected a raised level of uncertainty and even panic within the market. The research underscored a few central trends as policyholders conform with stay-at-home orders, spending far less time on the roads than they would under normal circumstances.
According to the research, the majority of consumers aren’t even aware that car insurers were ordered to offer relief to their customers. Moreover, among the 37 percent who did know that insurance companies were required to refund or credit their premiums in some way, most don’t view them as adequate incentive to remain loyal to their current insurer.
According to J.D. Power’s conclusions about the coronavirus auto insurance discounts, the refunds are not large enough to keep up policyholder loyalty. Moreover, at the moment, customers have an increased likelihood of comparison shopping for a better deal, changing providers, or outright canceling policies.