One in five auto insurance customers in Canada have shopped for a new insurer in the past 12 months and 9 per cent have switched – but which insurers are being hit the hardest, while others are meeting with success?
According to a recent J.D. Power 2014 Canadian Auto Insurance Satisfaction Study, each insurance company captures less than an average of 1 per cent of customers shopping for a new insurance policy.
Brand awareness limits most carriers’ ability to attract shoppers, states the study, as they typically limit their search to an average of only 1.5 quotes.
“Even the largest national insurance companies have limited awareness,” says Jeremy Bowler, senior director of the insurance practice at J.D. Power. “Some of the big carriers may be well-known in one city or province, but have little or no awareness outside of that market. To grow their business, they need to build brand awareness, which traditionally requires significant advertising investment.”
(See page 3 for provincial insurer rankings)
Once an insurer wins a new customer, every touch point they have with that customer is crucial and can be the difference between a loyal customer and a defector. Study findings show that the three most critical touch points are the annual or semi-annual renewal notice; when a customer contacts their insurer for non-claims-related reasons (62 per cent of customers have contacted their insurer either directly or through an agent in the past 12 months regarding a non-claim-related issue); and when a customer files a claim (12 per cent of customers filed an auto claim in the past year). (continued.)
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Key takeaways from the study:
- The average growth rate among all insurers included in the study is 4 per cent. The largest growth rate is 24 per cent, while the largest attrition rate is 11 per cent;
- Across the three provinces in the study, overall customer satisfaction drops to 758 in 2014 from 766 in 2013. Declines in satisfaction with claims (-29 points), interaction (-13) and billing and payment (-12) account for the majority of the year-over-year drop. Price is the only factor in which satisfaction improves; and
- Price, historically a key differentiator among insurance companies, is having less impact on overall customer satisfaction. Price satisfaction is highest in Quebec, primarily because the government insures against injuries to people, thus bodily injury coverage is not required for vehicle owners, keeping premiums lower than in other provinces. In Ontario, auto insurance is regulated by the Financial Services Commission of Ontario, which in 2013 implemented its Auto Insurance Cost and Rate Reduction Strategy, contributing to an increase in price satisfaction of 6 points (on a 1,000-point scale).
The study, now in its seventh year, measures insurance customer experiences with their primary auto insurer in Canada. Customer satisfaction is measured across five factors (in order of importance): interaction; price; policy offerings; billing and payment; and claims. Insurers are ranked in three provinces: Ontario, Alberta and Quebec.
(See page 3 for provincial insurer rankings)
Regional Rankings
Customer satisfaction in Alberta averages 744, down 3 points from 2013. Co-operators ranks highest in customer satisfaction in Alberta with a score of 782. Alberta Motor Association ranks second (770), followed by Johnson Insurance (754).
Customer satisfaction in Ontario averages 749, down 7 points from 2013. Belairdirect (784) ranks highest in Ontario, followed by
CAA Insurance Company (778) and State Farm (773).
Customer satisfaction in Quebec improves 2 points in 2014 to 804. In Quebec, The Personal ranks highest for a second consecutive year, with a score of 837. La Capitale ranks second (821) and
Desjardins General Insurance (805) third. (continued.)
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Provincial Rankings
Alberta
Overall Customer Satisfaction Index Scores
(Based on a 1,000-point scale)
Co-operators 782 5
Alberta Motor Association 770 4
Johnson Insurance 754 4
Aviva Insurance 745 3
Alberta Average 744 3
Intact Insurance 740 3
Wawanesa 734 2
TD Insurance 734 2
Note: Included in the study but not ranked due to sample size are Allstate, Canadian Direct, Dominion of Canada, Economical Insurance, RBC Insurance and State Farm.
Power Circle Ratings Legend
5 – Among the best
4 – Better than most
3 – About average
2 – The rest
Ontario
Belairdirect 784 5
CAA Insurance Company 778 5
State Farm 773 4
Grey Power 767 4
Co-operators 763 4
Allstate 753 3
Dominion of Canada 752 3
Johnson Insurance 750 3
Ontario Average 749 3
The Personal 749 3
Desjardins General Insurance 748 3
Intact Insurance 747 3
Gore Mutual 747 3
RBC Insurance 746 3
Economical Insurance 740 3
TD Insurance 736 3
Aviva Insurance 729 2
Wawanesa 725 2
RSA 719 2
Note: Included in the study but not ranked due to sample size are Primmum and Zenith Insurance.
Quebec
The Personal 837 5
La Capitale 821 4
Desjardins General Insurance 805 3
Quebec Average 804 3
Intact Insurance 801 3
Industrial Alliance 800 3
Belairdirect 798 3
Aviva Insurance 794 3
L'Union Canadienne 793 3
National Bank Insurance 778 2
TD Insurance 777 2
Note: Included in the study but not ranked due to sample size are Allstate, Promutuel, SSQ General and Wawanesa.
The 2014 Canadian Auto Insurance Satisfaction Study is based on responses from nearly 9,910 auto insurance policyholders. The study was fielded in January and February 2014.
