U.S. auto insurers are facing elevated rate pressure and weakening customer loyalty, according to J.D. Power’s 2026 Insurance Outlook.
"Sky-high policy rates have finally changed the game," the authors wrote. "After five years of unprecedented volatility, insurers are beginning to see the consequences of gradual, but consistent premium hikes. Faced with bigger bills, customers have come to expect more from their insurers. Now more than ever, insurers that fail to provide compelling offers to customers will send them rushing into the waiting arms of a company that will."
The outlook found 57% of auto insurance customers shopped for coverage in 2025, up from 49% a year earlier, marking the highest level of activity recorded by J.D. Power. Unlike prior years, increased shopping translated into higher switching, with 29% of customers changing insurers during the year.
Retention risk is rising even among traditionally stable segments. Only 51% of high-value customers said they would definitely renew their policies, despite typically holding multiple products or long-term relationships. The shift is linked to sustained premium increases and heightened price sensitivity.
Digital channels continue to gain share in shopping and purchasing. The outlook shows 47% of policyholders purchased coverage digitally, compared with 35% through agents and 17% through call centres. Seamless digital experiences across quoting, servicing and claims remain the strongest driver of overall customer satisfaction.
Artificial intelligence is increasingly influencing how customers research coverage, compare pricing and navigate insurance terminology, reinforcing expectations for faster, more transparent digital interactions.
Usage-based insurance adoption remains uneven. In 2025, 17% of insurers offered usage-based programs, up from 15% in 2024 but below the 22% reported in 2023. Mobile apps remained the most common data-collection method, though customer satisfaction was lower for app-based programs than for onboard vehicle systems or self-reported data.
The outlook indicates proactive, personalized communication around pricing will become increasingly important as volatility continues into 2026.
