A J.D. Power study has revealed that customer satisfaction with Canadian auto insurance companies declined during the past year.
The study suggests the decline was driven mainly by rising consumer expectations and a lack of proper communication on rate action.
According to the J.D. Power 2018 Canadian Auto Insurance Satisfaction Study, overall satisfaction dropped six points to 778 (on a 1,000-point scale), down from 784 a year ago.
J.D. Power found that consumers are “setting a high bar for auto insurers.” Customers expect insurers to provide products and services that are “relevant, personalized, easy and timely,” thanks to their experience with digital service providers not related to the insurance industry.
“Auto insurance customers’ expectations are increasingly being shaped by experiences outside the industry,” explained J.D. Power insurance practice director Tom Super. “Customers have come to expect interactions with a brand to be easy, provided in real time and relevant to them—whether speaking with a representative in a call centre, navigating the company’s website or visiting a local agent’s office.”
The study also noted the importance of maintaining proactive communication when making adjustments to premiums. J.D. Power found that insurers who avoid openly communicating premium increases to their customers make the problem worse.
The satisfaction score among customers who were not notified properly of a premium increase is 70 points lower than among customers who were informed. Surprisingly, lack of communication about a price decrease also led to a negative effect on satisfaction – a decline of 55 points. Customers who said their insurer failed to communicate a rate action are significantly less likely to recommend their insurer, renew their insurance, or continue to work with their current agent or broker.
“Although overall customer satisfaction is down, there are opportunities for insurers to turn things around quickly and redeem the situation,” Super added. “Communicating more frequently and leveraging digital channels to better engage with customers will ensure fast, streamlined issue resolution. These elements have the power to turn things around fast.”
