Insurance agents all over North America got a massive shock at the end of April when Walmart announced its plan to partner up with Autoinsurance.com to offer its online customers discounted auto insurance. Our customers too often have to settle for auto insurance policies that aren't the best fit and cost more than they want to spend. With Auto Insurance.com, we're helping our customers save money on one of their largest household expenses in a new, quick and easy way. It appears that the price savings aren't just an empty promise either, as a successful test project in Pennsylvania which ran throughout 2013 showed most of the customers in the pilot project received an average savings of nearly $1200 a year!
Insurance industry experts not convinced...
Insurance agents from all over are skeptical of the promised savings. The National Association of Professional Insurance Agents (PIA) a trade membership organization that represents insurance agents, ensuring their compliance with industry service regulations, is one such agency that feels the savings have been bloated for marketing purposes. The organizations (PIA's) National Executive VP and CEO Mike Becker has firmly stated that Walmart says that the system it is using compares rates on an existing policy with rates on policies with the same coverage. If that is the case, we are skeptical that the average price difference for the same level of coverage can be that large.
So are the promised savings really possible?
Organizations like PIA and the certified main street insurance agents they represent do have a vested interest in convincing you to speak to an actual agent (who charges fees on top of coverage premiums) in order to get the best coverage at the lowest possible rate. However, they also make a very good point about the unbelievable cost savings the Pennsylvania test project showed. One look at the Walmart car and you'll quickly see that while some big names in the automotive insurance industry are missing, the Autoinsurance.com service are merely acting as a comparative go-between for the following companies: Esurance, Travelers, General, 21st Century, Safeco and Progressive. So how did the customers in Pennsylvania, who participated in the pilot project, receive such amazing cost savings of over $93 a month? That being an average savings mind you; one would have to assume some of the people in the Pennsylvania project received slightly lower savings, while others could have been saving hundreds a month over what they were paying before, just by using an online insurance agent! (i.e., Auto Insurance.com) There could be significant savings involved, due to lower agency fees, since a storefront agent would have more overhead costs to manage, which of course gets passed on in the form of more costly fees. However, nearly $1200 per year seems a little nonsensical.
Can you trust the Walmart/Auto Insurance.com partnership?
It does appear that the numbers have been skewed in order to market the service more effectively. Walmart will definitely benefit ($$) when and if you decide to purchase a policy through their service. However, the big-box giant stands to have their reputation sullied, considerably, if their customers are led astray. And just like a traditional storefront agent, you can pick up the phone and talk to a real representative from Autoinsurance.com if you have questions or concerns. The only thing missing from the equation is the face-to-face that you'd get if you were sitting across the table from an agent. If you don't need to look someone in the eye before you sign on the dotted line, there's no reason to not use this service. Just don't expect to save enough money to make an extra mortgage or rent payment!