A record number of serious collisions, spiking used-vehicle prices and rising repair costs have forced auto insurers to raise rates. This, in turn, has spurred a sharp decline in customer satisfaction with the price of auto insurance, according to a new study from J.D. Power. However, industry efforts to improve customer engagement have kept overall customer satisfaction at a level similar to a year ago.
“The current situation is a tough one for auto insurers, but it is not impossible in the current inflationary environment to build customer satisfaction and retention,” said Robert Lakdziak, J.D. Power director of insurance intelligence. “J.D. Power finds two bright spots in the data for insurers. First, those insurers that are transparent and notify customers in advance of price increases can blunt the negative effects of a price increase. Second, usage-based insurance is growing quickly, with an all-time high number of customers adopting these programs, and due to their experience using them, overall customer satisfaction levels have significantly risen.”
Key findings of the study include:
- Overall customer satisfaction with auto insurance providers was 834 (on a 1,000-point scale), down from 835 a year ago. However, customer satisfaction with the price of insurance is 769, a five-point drop from 2021
- Participation in usage-based insurance programs has doubled since 2016, with 16% of auto insurance customers now participating. Price satisfaction among customers participating in usage-based programs is 59 points higher on average than among customers overall
- Insurers that are proactive in informing customers of premium increases are able to mitigate the negative effects they generate. In the past year, 59% of customers experiencing a price increase were informed in advance by their insurer – up from 44% in 2016 – and overall satisfaction scores are an average of 37 points higher among pre-notified customers
- When customers engage with their insurers through both digital and live channels – such as agents or customer service representatives – satisfaction with the live channel increases. The reason for this is efficiency – customers can handle transactions quickly while spending more valuable time with an agent
Read next: Revealed – How satisfied are US customers with their insurers?
The study measured customer satisfaction with auto insurance in 11 geographic regions. The highest-ranking insurers by region were:
- California: Wawanesa (879)
- Central: Shelter (866)
- Florida: The Hartford (860)
- Mid-Atlantic: Erie Insurance (867)
- New England: Amica Mutual (862)
- New York: New York Central Mutual (834)
- North Central: Erie Insurance (876)
- Northwest: The Hartford (842)
- Southeast: Farm Bureau Insurance – Tennessee (876)
- Southwest: State Farm (848)
- Texas: Texas Farm Bureau (873)
