Customers Significantly Less Satisfied With Auto Insurance Companies

August 3, 2010

After peaking in 2009, overall customer satisfaction with insurance companies has declined significantly in 2010, largely because of price, according to the J.D. Power and Associates “2010 U.S. National Auto Insurance Study.” Overall customer satisfaction averaged 777 on a 1,000-point scale, a decrease of 10 points from 2009.

The study, which measured customer satisfaction with auto insurance companies across five factors — interaction; policy offerings; billing and payment; price; and claims — noted that more customers had seen price increases in 2010, and often with no advance notice of the price change. The proportion of customers who reported experiencing an increase in premiums increased significantly to 22 percent in 2010, compared with 17 percent in 2009. In addition, six in 10 policyholders who experienced a premium increase indicated they received no advance notice of the change from their insurers.

“Now that the market has stabilized, consumers are feeling more in control of their finances and have become more aware of and sensitive to the rate increases that have started to occur since the recent recessionary period,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “As a result, customers are considerably less satisfied with their insurer and their rates, and have begun shopping for new insurers at unprecedented high levels not seen since prior to the recession.”

Satisfaction with price decreased by more than 30 index points compared with 2009, according to the study. At the same time, price also gained in relative importance as a driver of overall satisfaction.

Generational Trends

The study also found Generation Y auto insurance customers (those born between 1977 and 1994) to be more critical of their insurance providers, compared with consumers in other generational groups. They were especially critical in areas regarding the ease of contacting a representative and receiving clear explanations of their insurance policies.

Baby Boomers (those born between 1946 and 1964) tend to place importance on traditional communications from their insurer, such as a new customer welcome kits, newsletters and magazines. Meanwhile, Gen Y customers are more concerned with being able to access their policy information online, the study said.

While Web site usage among Baby Boomers is increasing, 40 percent of Baby Boomers reported using their insurer’s Web site to review or make changes to their policies, compared with 60 percent of Gen Y customers.

While use of insurer Web sites continues to increase, other interaction channels — such as mobile phones — are beginning to emerge, with both agent-based and direct insurers rapidly introducing smartphone applications into the market. According to the J.D. Power Insurance Intelligence Monitor, insurance customers — particularly Gen Y customers — are apt to use mobile phone apps that keep their needs in mind, such as the Nationwide “accident toolkit” or the USAA app that allows users to display their policy information during a traffic stop.

“This type of functionality goes beyond simple information delivery—it involves providing real tools and services customers need, use and appreciate,” Bowler said. “It’s likely that these value-added apps could contribute to brand loyalty—and even the creation of brand ambassadors.”

Insurance Company Rankings

In the overall rankings, Amica Mutual ranked highest in customer satisfaction with auto insurance companies for an 11th consecutive year with a score of 849. Erie Insurance (815) and Auto-Owners Insurance (813) followed in the rankings. New Jersey Manufacturers Insurance Co. and USAA also received high levels of customer satisfaction, although they werenot included in the rankings because of the closed natures of their memberships.USAA is an insurance provider open only to U.S. military personnel and their families. New Jersey Manufacturers Insurance Co. is open only to New Jersey Business & Industry Association members, State of New Jersey employees, NJM’s previously insured drivers and/or previous/current auto/homeowner policyholders.

The 2010 U.S. National Auto Insurance Study is based on more than 25,000 responses from auto insurance policyholders. The study was fielded in February and March 2010.

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in market research, forecasting, performance improvement, Web intelligence and customer satisfaction business sectors. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually.

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