US: you shouldn’t be loyal to the insurance company image

According to numerous studies and research, even though long-term customers do get discounts from their insurers, motorists are usually better off shopping around the market than sticking to just one company.

The Texas Office of Public Insurance Counsel unveiled a recent study that proved a consumer sticking to the same auto insurer for eight years would benefit from a reduced insurance premium if switching to a competitor – and the saving was significant, of 19 percent. “It is disappointing to think your loyalty to a company can hurt you,” says Carol Lachnit, features editor for automotive website “They’re sort of measuring how likely you are to resist a price increase to your premium,” she added. That’s because even when showing they reward your loyalty with a reduction, they still use a practice called price optimization that factors in other considerate, apart from risk, including a higher price tag they believe you might tolerate. Still, there are other factors to loyalty – for example some clients stick to the same company for decades because of customer service.

A recent research by customer satisfaction measurement company J.D. Power and Associates has signaled that even as auto insurance rates soared by 2.1 percent last year and 2.5 percent in 2013, only a small number of customers decided to shop around. Only 39 percent decided to see other offers, but only a quarter of them also made the actual switch. Still, when shopping around, a few precautions are in order: keep a list of your coverage at hand to make sure you compare the same things; verify the insurer’s service level and reputation and check the complaint history through the state’s insurance commission.

Via Reuters