Auto Insurance Customer Satisfaction at an All-Time High
J.D. Power found particularly sharp increases in customer satisfaction with policy offerings and interactions with insurers.
Insurance Networking News, June 26, 2012
Customer satisfaction with auto insurance companies is at an all-time high, according to the J.D. Power and Associates’ “2012 U.S. Auto Insurance Study,” due to increased satisfaction with policy offerings and billing and payment.
The study measures customer satisfaction in five categories:
• policy offerings
• billing and payment
On a 1,000 point scale, overall satisfaction was 804, an increase of 14 points from 2011, and reached the highest level measured since the survey began in 2000.
Satisfaction with policy offerings increased by 30 points; satisfaction with interactions increased 19 points; satisfaction with price was unchanged from last year.
“Although satisfaction with price remains consistent from 2011, auto insurance companies have made great strides in all other areas,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “Specifically in the area of policy offerings, a number of insurance companies place an emphasis on product differentiation in their advertising and packaging of discounts and offerings.”
According to the study, 20 percent of auto insurance customers received an insurer-initiated rate increase, and 63 percent of them received an increase of $50 or more. Satisfaction for those customers was measured at 735, compared with 797 for those with increases of less than $50.
“Among customers whose insurers meet or exceed all their service expectations, modest rate increases appear to be well-tolerated, provided the rate adjustment amounts to less than $50. However, larger rate adjustments may trigger customers to consider shopping for a new insurer, especially those customers who are less engaged with their insurance company,” Bowler said. “One method auto insurers can use to mitigate dissatisfaction with increasing rates is to proactively communicate the rate change prior to the renewal notice, and engage in discussions with customers regarding their options.”
More than half of customers (56 percent) receiving a rate increase were not notified prior to renewal notice and their satisfaction levels were lower (746) than those who had been notified (807).
While a significant number of social media comments on auto insurance rate hikes indicate a strong desire to switch carriers or begin the shopping process and many ask for recommendations, few people actually change carriers.
“Our research shows that most customers who shop for insurance ultimately do not switch. However, among those who are driven to shop because they are dissatisfied with the service they receive, three of four will keep shopping until they find a new insurer. With many insurers filing new property and auto rates across the country, a growing proportion of customers are starting to receive rate increase notifications, often a catalyst for shopping behavior,” Bowler said. “Proactively notifying customers and discussing options may help mitigate disappointment and shopping for insurance.”
Results by region:
• California Region: Wawanesa (823), followed by Automobile Club of Southern California (AAA) (807) and State Farm (806)
• West Region: State Farm ranked highest (837) and was the only eligible insurer that performed above the regional average
• Central Region: Texas Farm Bureau (857); State Farm (832); and GEICO (830).
• Southeast Region: Farm Bureau Insurance - Tennessee (828); North Carolina Farm Bureau (823) and State Farm (821).
• North Central Region: Auto-Owners Insurance and State Farm tied at 828; Erie Insurance (823)
• Northeast Region: Amica Mutual (867); New York Central Mutual (811); and GEICO (793)
• Mid-Atlantic Region: Erie Insurance (834); State Farm (813)
According to the study: customer satisfaction varied from an average high of 814 in the Southeast region to a low of 784 in the Northeast region. While the Southeast region achieved the highest scores in interaction, billing and payment, policy offerings and claims, the West region performs particularly well in price.
The study is based on 35,000 responses from auto insurance customers and was conducted between March and May 2012.
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