JD Power’s Auto Insurance Study Goes National, Rates Customer Satisfaction

By | October 16, 2000

After testing the waters last year with its first annual California Auto Insurance Satisfaction Study, J.D. Power & Associates decided to take to the road and make this year’s survey national in scope.

“Last year’s California study accomplished our objective,” said Jeff Taylor, senior research manager for J.D. Power & Associates. “Our attempt was to get started in California because it was such a large state, and then to go toward a national study and that’s what we did here.”

Based on responses from 18,733 auto insurance policyholders who reside in the U.S., the study identifies the competitive factors that drive consumer satisfaction, choice and retention among the customers of the top auto insurance companies in each state.

The results—released last month—reveal that the primary drivers of overall satisfaction with an auto insurance carrier include: the ability of the carrier to fulfill the commitments made at the time of purchase; the ongoing support and guidance provided by company personnel; billing practices; and price competitiveness.

“We tried to target the carriers who had somewhere near 1 percent of the national market, although a few dipped slightly below that,” Taylor explained.

Scoring highest among all companies included in the study was USAA, an insurance provider open only to active and retired military personnel and their immediate families; but given the circumstances, it was not included in the ranking. As a result, Amica Mutual received the highest ranking, followed by Erie Insurance and State Farm Mutual Insurance.

According to the study, even though 75 percent of customers think it is important to have an agent, many are willing to drop the agent for a better price. Results revealed that roughly 20 percent of customers indicate a willingness to drop their agent if doing so would result in a $100 reduction in their premiums, and more than 50 percent indicate they would drop their agent if the reduction would result in a savings of $200 or more.

But it’s not all bad news for independent agents, as “one-third of the respondents said that they would never give up their agent,” Taylor said. “I guess one of the more surprising things is that customers who purchase direct are more satisfied overall than are those who use agents.”

Another threat to the traditional agent/policyholder relationship may be providers’ use of the Internet to sell auto insurance. While only 7 percent of consumers have used the Internet in the past during the auto insurance shopping/purchase process, 32 percent indicate they intend to do so in the future.

“The Internet is playing a big role in the industry today,” Taylor said. “We didn’t differentiate between shopping and information gathering in Internet usage, but one of the things we’re seeing…is that people are using agents less as a source of information for shopping, and they”sre substituting the Internet for that purpose.”

Basically, companies who provide the “traditional” personalized services plus offer the flexibility of purchasing services over the Internet have the right equation—one that equals the most successful providers.

“Probably one of the most interesting findings was the professionalism and the honesty of agents and company representatives really drove customer satisfaction,” Taylor said.

Results of the survey are available to auto insurance carriers for $50,000. The cost is about half of that if a carrier was not included in the survey, but wants to purchase it for competitive information, Taylor said.

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