Despite steady increases in premium prices during the past five years, auto owners’ satisfaction with auto insurers is reaching record-high levels, according to a recent J.D. Power 2014 U.S. Auto Insurance Study.
Measuring customer satisfaction across five factors: interaction; price; policy offerings; billing and payment; and claims, the study found overall satisfaction with auto insurance companies has increased by a significant 16 points (on a 1,000-point scale) to 810 in 2014, the highest since the study was launched in 2000.
“A premium increase often triggers shopping behavior, but we’re seeing fewer people shopping,” says Jeremy Bowler, senior director of the insurance practice at J.D. Power. “This indicates that insurers are more effectively communicating with their customers, making them aware of the premium increases when they occur and why they’re necessary, and demonstrating the value of their coverage.”
The milestone comes at a time when premiums have been trending up for the past few years.
While the percent of customers experiencing an insurer-initiated premium increase is about even to last year, 19 percent versus 20 percent in 2013, among those who experienced a rate hike, the average increase is considerably lower than last year: $86 in 2014, compared with $153 in 2013.
Texans happier than Californians
Satisfaction varies regionally from a high of 820 in the Texas and Central regions to a low of 795 in the California and New England regions. Ten of the 11 study regions post significant double-digit increases in insurer performance in 2014, with the largest improvements in the New York (+29 points) and New England (+26) regions.
Auto-Owners Insurance, State Farm and The Hartford each ranked highest in two of the 11 region.
Key takeaways
- Customer loyalty and advocacy are improving. More than half (51 per cent) of customers say they ‘definitely will’ renew their auto insurance policy with their current provider, up from 49 percent in 2013. Additionally, 49 percent of customers say they ‘definitely will’ recommend their insurer to family and friends in 2014, an increase from 48 percent in 2013.
- When analyzing insurance customers by attitudinal and preference-based segmentation, overall satisfaction is highest among Loyal Advice Seekers (867) — customers who are the least likely to both shop and switch carriers due to a strong relationship with their agent. Satisfaction is lowest among Unengaged customers (742) — those who have little, if any, relationship with their insurer.
- Among Technologists — customers who prefer to interact through technology — more than 60 percent have interacted with their insurer in the past 12 months through digital channels, such as their carrier’s website and social media, and 40 percent have communicated exclusively via digital.
- Most of the improvement this year at the insurer level comes from the smaller insurers in the industry. In aggregate, the 20 largest insurers, based on the amount of written premiums, improve by 10 points in 2014, compared with 2013, while the smallest insurers, those outside of the largest 30, improve by 41 points.
