The number of visitors who turn to the Internet to seek service or obtain an auto insurance quote has increased considerably, according to a new study released by J.D. Power and Associates.
“Consumers compelled to shop are greatly influenced by the cost of coverage to switch providers, and the Internet provides them a quick and easy way to obtain quotes from competing carriers,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “This price transparency presents a challenge to carriers in terms of customer retention, so many providers are building service functionality and actively promoting their own Web sites as a means of attracting and retaining customers.”
The 2005 National Auto Insurance Study reported that more than one-fourth (27%) of consumers stated they shopped for auto insurance in the past year and of those, 33 percent used the Internet to get a quote. However, by far the greatest increase in online traffic occurred among existing customers using their insurer’s Web site to seek service.
“Not only does the Internet provide agency and direct writers the opportunity to attract new customers, but also the opportunity to build loyalty by providing Internet-enabled self-service,” said Bowler.
The study identifies five major factors that contribute to overall customer satisfaction with auto insurance providers. They are (in order of importance): non-claim interaction with the provider, billing, purchase/policy experience, cost and claims experience.
Overall customer satisfaction with auto insurance providers has improved every year since 2002, and now stands at 796 index points (based on a 1,000-point scale).
For a sixth consecutive year, Amica Mutual ranks highest in overall customer satisfaction, setting the benchmark in all five of the factors driving overall satisfaction. Amica is followed in the rankings by State Farm and GEICO, respectively.
State Farm, American Family and Allstate, all captive agency carriers demonstrate significant improvements in overall customer satisfaction compared to 2004. With a 25 index-point increase over 2004, State Farm records the largest year-over-year satisfaction improvement among the 24 companies profiled in the study.
“For the typical customer, their day-to-day interaction with the insurance provider has the greatest impact on their overall impression of the company and its brand. Having a dedicated local agent handling their insurance needs can be a big advantage in creating a lasting relationship between insurer and policyholder,” said Bowler. “However, some insurance customers with simple needs place less importance on a local agent and several carriers have made big strides in refining their direct communication channels with customers.”
The study finds that customer satisfaction has a direct and profound effect on customers’ intent to renew their policies with the same carrier. Among customers who say they are highly satisfied with their carrier (providing an overall rating of 813 or higher), 54 percent said they would not switch carriers for a lower coverage price. That drops to 34 percent among customers providing a rating of 775 or lower.
“The costs of attracting new customers are exponentially higher than in keeping existing customers, so it’s important for carriers to earn loyalty through customer satisfaction measures,” said Bowler. “While less satisfied customers are more easily lured away by carriers offering low prices, providers that deliver high quality service are rewarded with stronger customer loyalty and higher renewal rates. Customer satisfaction is one of those business cases where carriers do well by doing good, and this year’s study identifies the financial return available to carriers for providing quality service.”
The 2005 National Auto Insurance Study is based on responses from 15,272 auto insurance policy holders.
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