Study: Auto Insurance Satisfaction at Highest Point in a Decade

J.D. Power Satisfaction with Auto Insurers 2012Overall satisfaction with auto insurers is at an all-time high as customers are saying they’re happier with the types of available policies, according to a new report from J.D. Power and Associates.

Based on a 1,000-point scale, the study said overall satisfaction is at 804 points, a 14-point jump from 2011.

Overall satisfaction levels are at their highest point since the firm’s first U.S. Auto Insurance Study in 2000. That’s despite the fact that 20 percent of the nearly 35,000 consumers surveyed said their insurers raised rates on them in 2011.

Price Becoming More Important, Firm Rep Says

In its latest study, the firm rated customer satisfaction on five factors—interaction, price, policy offerings, billing and payment, and claims—and found that policyholder satisfaction largely increased across all of those factors.

Policy offerings saw the biggest gain, improving by 30 points since last year. Satisfaction with interaction increased 19 points compared with 2011.

“A number of insurance companies place an emphasis on product differentiation in their advertising and packaging of discounts and offerings,” Jeremy Bowler, senior director of insurance practices at J.D. Power and Associates, said in a statement.

Satisfaction with price stayed relatively steady. However, the firm’s studies in the past half-decade show consumers are placing greater importance on finding the cheapest auto insurance companies available.

At the same time, the importance of interaction with an insurance company has seen “gradual erosion,” according to Bowler, who attributed some of the change to economic changes since 2007.

In 2007, interaction accounted for 41 percent of overall satisfaction, Bowler said, but it currently accounts for 30 percent. In contrast, price accounted for 13 percent of “what really mattered to the customer” in 2007, but has since gained 6 percentage points and now makes up almost one-fifth of overall satisfaction.

Study Finds ‘Tipping Point’ for Rate Hikes

The study also measured customer satisfaction with rate increases, finding that 1 out of every 5 policyholders in the study saw higher rates in 2012 compared with 2011.

Firm researchers also found that “$50 is a bit of a tipping point,” Bowler said, with customers who experienced rate hikes higher than $50 showing an overall satisfaction level that was about 8 percent lower than those who saw rate hikes of less than $50.

Bowler also said that hits to satisfaction levels can be mitigated if insurers “better present that rate increase.” The study found that more than half, 56 percent, of policyholders who had their rates increased were not notified before the renewal notice.

Overall satisfaction levels showed a 61-point swing between customers who had policy review offers and conversations about rates before hikes and those who saw hikes without notice.

Bowler said that insurers could present several options to their policyholders when rates increase, including raising deductibles, adjusting coverage limits and bundling multiple lines of coverage for discounts.

“Whatever the stratagem, having that conversation early is a great salve,” he said.

Rate Increases Lead to More Shopping

Rate hikes push many consumers to shop around, Bowler said, and the firm’s previous studies on shopping habits of auto insurance customers illuminate what insurers face after they raise their prices.

An April study found that, while the rate of customers looking for a new insurer is low, the rate at which shopping policyholders switch companies is at its highest point since 2008.

Another study from the firm, released in May, explored the extent to which websites played into a customer’s shopping experience. That study found that an easy-to-use, accurate quote process on an insurer’s website weighed heavily into how a consumer viewed that company.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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