Despite Rising Premiums Auto Insurance Satisfaction at All Time High

Despite steady increases in premium prices during the past five years, auto owners’ satisfaction with auto insurers reaches record-high levels, according to the J.D. Power 2014 U.S. Auto Insurance Study released last week.

The study measures customer satisfaction across five factors: interaction; price; policy offerings; billing and payment; and claims.

Overall satisfaction with auto insurance companies increases by a significant 16 points (on a 1,000-point scale) to 810 in 2014, the highest since the study launched in 2000. The satisfaction 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 vs. 20 percent in 2013, among those who experienced a rate hike, the average increase is much lower than last year, $86 in 2014, compared with $153 in 2013.

“A premium increase often triggers shopping behavior, but we’re seeing fewer people shopping,” said 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.”

Findings show that 13 percent of customers who experience an increase in their premiums shop for a new provider.

The auto insurance customer experience improves significantly across all factors in 2014, with the largest year-over-year increases in price (+20 points) and billing and payment (+19). Interaction, the factor with the largest impact on overall satisfaction, improves by 13 points.

The increase in price satisfaction is attributed to a rise in the percentage of customers whose premiums have remained the same during the past 12 months, compared with 2013 (55 vs. 52 percent, respectively), and a slight decline in the proportion of those with insurer-initiated increases.

KEY FINDINGS

Customer loyalty and advocacy are improving. More than half (51 percent) 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.

In addition to smaller increases this year, insurers have more often notified customers of the rise in premiums through their preferred communication channel (57 percent in 2014 vs. 53 percent in 2013).

To see how insurers fared in each region, paste this link into web browser: – http://www.jdpower.com/press-releases/2014-us-auto-insurance-study#sthash.vLBYZsUe.dpuf

Source: J.D. Power