May 6, 2020

How are consumers perceiving auto insurance during the COVID-19 crisis?

How are consumers perceiving auto insurance during the COVID-19 crisis?


Since people are driving less in the midst of COVID-19
related stay-at-home orders, many auto insurers have responded with premium
refunds
totaling about $10 billion.

How are consumers reacting to these refunds? A May 5 webinar
co-hosted by Cambridge Mobile Telematics’ (CMT) VP of Insurance &
Government Affairs, Ryan McMahon, and J.D. Power’s VP of Insurance
Intelligence, Kyle Schmitt, shed light on this question.

J.D. Power has been conducting consumer sentiment surveys since March 24. Schmitt said that one key takeaway is that in light of pandemic related layoffs, customers are thinking pragmatically about auto insurance, so the timing of the premium relief announcements was excellent. However, it’s important to note that auto insurance is not top of mind for many consumers struggling to keep the lights on or food on the table, and not everyone is aware of refunds.

How are consumers perceiving auto insurance during the COVID-19 crisis?

Here are a few other key takeaways:

  • McMahon noted that while miles travelled are
    down, speeding and distraction both peaked in April based on CMT’s analysis,
    and fatalities are up.
  • Schmitt said that changes in price stability
    driven by broad market conditions (such as accident frequency) are not well
    received by consumers who will shop around in response; in contrast to price
    increases driven by a life event or an accident which consumers tend to take in
    stride.
  • When it comes to telematics, value is key.
    Consumers expect to continue to not drive as much in the foreseeable future and
    are thinking about the cost savings offered by telematics programs, therefore
    interest in telematics has spiked according J.D. Power surveys.
  • Of those that think their driving rates will
    remain low 40 percent are interested in telematics.

The panelists were also asked to speculate about possible
increases in fraud, and McMahon said that fraud activity always comes with
economic reductions, however it’s possible that fraudulent claims may be easier
to spot because there are fewer claims.



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