COSTA MESA, Calif. — Despite steadily increasing premiums, auto insurance customers are more satisfied with their carriers than ever. The reason? According to the J.D. Power 2018 U.S. Auto Insurance Study, SM insurers are beginning to get the customer interaction formula right, offering a mix of digital and live interactions that keep customers engaged with their brands across all channels.
“Cost is not the sole indicator of customer satisfaction in the auto insurance industry,” said Robert Lajdziak, insurance practice business consultant at J.D. Power. “Low prices may attract new customers, but it’s service that keeps them. The auto insurers that increase customer satisfaction across all facets of the customer experience make price just one part of the overall relationship.”
More frequent use of digital interaction channels, particularly for monthly billing, also has played a major role in driving higher levels of satisfaction.
“Customer satisfaction is at its highest when customers take care of transactions themselves and save the high-value interactions for live channels,” Lajdziak said. “However, the increasing demand and use of digital self-service options is putting pressure on agents to evolve their value proposition to offer more products and services to help customers with complex needs and risks.”
Following are some of the key findings of the 2018 study:
• Record-high customer satisfaction breeds loyalty: Overall customer satisfaction with U.S. auto insurers improves in 2018 and is now at a record-high level of 826 (on a 1,000-point scale). This increase in customer satisfaction is inversely correlated with a decline in auto insurance shopping rates, which have reached a record low.
• Insurers delivering strong omnichannel experience: Customer satisfaction improves across all factors measured in the study, with the biggest gains in billing process and policy information ( up 11 points); policy offerings ( up 10); price (up six); and interaction (up three). The gain in the billing process and policy information factor is partly driven by increased satisfaction with electronic statements and monthly billing.
• Preference for digital interaction channels grows: Overall satisfaction tends to be highest when customers interact via a mix of online and offline methods of communication. The preference for digital forms of communication is greatest for low touch-point interactions, such as verifying payment receipt (73 percent digital preference); making payment (70 percent digital preference); and ordering proof of insurance cards (66 percent digital preference).
• Transparency is key when premium increases are introduced: When there is an insurer-initiated premium increase, it is important to communicate that an increase is coming. When customers are notified in advance of a premium increase, overall satisfaction is 797. When they are not notified, which happens 49 percent of the time, overall satisfaction drops 49 points to 748.
• Usage-based insurance programs grow significantly: Usage-based insurance programs, which leverage telematics technology to set insurance premiums based on how far and how safely a customer drives, are gaining converts. This year, 10 percent of insurance customers indicate participating in usage-based insurance programs, up from 8 percent in 2016 and 2017. While the most common reason for participating in a usage-based program is to obtain a discount, speeding alerts, vehicle tracking and driver coaching are gaining importance among customers currently using such programs.
The highest-ranked insurance brands in the North Central region, comprising Illinois, Indiana, Michigan, Ohio and Wisconsin are as follows, based on a 1,000-point scale: Auto-Owners Insurance, 850; COUNTRY Financial, 849; Cincinnati Insurance, 847; Erie Insurance, 845, which were labeled by JD Power as among the best; State Farm, 840; The Hartford, 838; MI Farm Bureau, 835, labeled as better than most; GEICO, 830; North Central Region, 829; Allstage, 823; American Family, 820, labeled as about average; Progressive, 818; Grange Insurance, 816; The Hanover, 816; Nationawide, 815; Liberty Mutual, 812; MetLife, 811; Automobile Club Group, 808; Farmers, 808; Travelers, 805; Sfeco, 803; Esurance, 799, labeled as the rest.
USAA ranked 905, among the best, but it is a provider open only to U.S. military personnel and their families and therefore was not included in the ranking. Included in the study but not ranked due to the sample size were 21st Century, Ameriprise, AmicaMutual and National General.