Policyholders aren't just grumbling about rate hikes anymore -- they're acting on them, and that is turning 2026 into a critical year for insurers' pricing, retention and product strategies, according to the J.D. Power 2025 U.S. Auto Insurance Study.
After several years of steady premium increases, the percentage of customers shopping for auto insurance reached a record 57% in 2025, up from 49% in 2024. About 29% of insurance customers, however, switched insurers in 2025 as more carriers re-opened appetite and offered competitive pricing.
The fallout is most acute where insurers can least afford it. Customers traditionally viewed as "high value," or loyal policyholders who are more likely to bundle multiple products, now say there are the least likely to renew. Just 51% of these high-value customers said they will definitely renew with their current insurer.
The sales talk issue
A core driver of that switching behavior is how carriers handle pricing communication, not just the size of the increase.
When customers understand why their premiums are going up, they tend to be more satisfied with what they pay, even in a rising-rate environment. In the absence of clear explanations from insurers, some customers are turning to artificial intelligence tools to decode policy language, understand coverage trade-offs and shop quotes.
The pivotal role of digital channels
Digital channels are now central to how insurance relationships are formed and maintained.
According to the study, the single most important KPI for overall customer satisfaction is providing a seamless cross-channel experience.
Customers who begin their interaction via an insurer’s app are 46% more likely to say they had a seamless experience than those who start by phone or through an agent. Overall, 47% of all insurance policy buyers now purchase through digital channels, compared with 35% through agents and 17% via call centers. When customers have an excellent digital experience (an overall satisfaction score of 801 or higher on a 1,000‑point scale), 92% say they definitely will use digital channels again; when the digital experience is poor (500 or less), that drops to 40%. For insurers, that makes digital experience design a core underwriting and retention lever, not just a tech project.
A highlight on usage-based insurance
Usage-based insurance (UBI) remains another key battleground. In the past year, 17% of insurers offered UBI programs to shoppers, up from 15% in 2024 but still below 22% in 2023.
UBI is widely used as a pricing and acquisition tool, promising premium savings in exchange for driving data. However, the way data is collected materially affects customer satisfaction. Using a mobile app, which is the most common approach, is tied to the lowest satisfaction score (628), compared with vehicle systems or onboard computers (703), dedicated devices installed in vehicles (656), or self‑reported data (640).
Price volatility will continue to drive some level of attrition. According to the study, the insurers best positioned for 2026 will be those that pair disciplined pricing with proactive, transparent communication about rate changes, invest in seamless digital journeys and deploy UBI and other data‑driven products in ways that build trust rather than suspicion.
Price volatility will continue to drive some level of attrition, but the study suggests insurers still have meaningful levers to protect retention - particularly among high-value customers.
First, insurers that proactively explain rate changes before renewal, using plain-language breakdowns tied to loss trends, repair costs and local driving conditions, tend to see higher renewal intent than those that rely on post-increase service interactions. Early, transparent communication reduces surprise and reframes pricing as a shared external pressure rather than an arbitrary carrier decision.
Second, carriers can segment retention efforts more precisely. High-value, multi-policy customers are showing heightened sensitivity to increases, suggesting targeted retention offers - such as temporary credits, deductible flexibility or loyalty-based benefits - may deliver better returns than broad, across-the-board discounts.
Third, digital journeys should be optimised not just for acquisition but for renewal. Insurers that allow customers to simulate coverage changes, deductibles or payment plans within apps or online portals give policyholders a sense of control that improves satisfaction even when premiums rise. Seamless handoffs between digital self-service and human support are particularly important for customers facing larger-than-average increases.
Finally, insurers deploying UBI and other data-driven products can improve retention by giving customers greater choice and transparency over how data is collected and used. Offering alternatives to app-based tracking, clearly articulating how driving behaviour translates into savings, and providing ongoing feedback rather than end-of-term surprises can help build trust and reduce churn.
According to the study, the insurers best positioned for 2026 will be those that pair disciplined pricing with proactive, transparent communication, invest in high-quality digital experiences, and use data-driven products to deepen customer relationships rather than simply extract short-term pricing advantages.
