2016 U.S. Auto Insurance Study: Large U.S. Auto Insurers Drag Industrywide Customer Satisfaction Down Due to Price Perception
Overall customer satisfaction with the nation’s largest auto insurers is declining following an improvement in each of the past 2 years, according to the recently released J.D. Power 2016 U.S. Auto Insurance Study.SM Further, the study finds that the perception of price increases is the main driver of this decline.
The study measures customer satisfaction on a 1,000-point scale in five factors (in order of importance): Interaction; Policy Offerings; Price; Billing Process and Policy Information; and Claims.
Overall satisfaction declines by 7 points in the 2016 study to 811, compared with 818 in 2015. The 17 largest insurers, among whom satisfaction drops by 7 points from 2015, primarily drive this overall decline. Comparatively, satisfaction among smaller insurers increases by 1 point from 2015. The overall decline is largely influenced by a 3-point decrease in Price satisfaction, which is attributable to a year-over-year 2-percentage-point decline in the number of customers who say they have not experienced a premium increase in the past 12 months. However, some customers perceive that they have had an insurer-initiated increase, even though they have not experienced a specific incident or life change that could account for the price hike.
According to the study, this year marks the first time in the past 6 years that small insurers achieve a higher satisfaction score than large insurers (815 vs. 814, respectively). More positive perceptions of price have helped drive the differing performances between the two groups, as the Price factor is the largest advantage small insurers have over large insurers.
“Price perception among customers of smaller insurers is likely influenced by the fact that they frequently select their insurer with the help of an independent agent,” said Greg Hoeg, vice president of the U.S. insurance operations at J.D. Power. “Smaller insurers benefit from the personal interactions provided by their agency force, including their ability to educate customers about the value their policy provides.”
Interaction Satisfaction Falls
Among the study’s key findings is that levels of satisfaction with call center representatives and local agents are down: 6 and 7 points, respectively. Satisfaction with policy offerings is down by 8 points, to 809. Customers also provide lower satisfaction ratings year over year for service elements, including the ease of making changes to an existing policy and ease of obtaining a new policy. However, satisfaction with assisted online interactions improves across all elements of the customer experience, including the promptness in communicating with a representative and timely resolution of problems.
“Insurance customers want their billing problems, policy questions, or claims resolved efficiently,” said Hoeg. “Today, more and more customers are interested in communicating via digital channels. Insurers should take note that the traditional call center representative may no longer be the most efficient and satisfying way to resolve an issue, even a complex one.”
Satisfaction Leads to Renewals
Among auto insurance customers who are delighted with their insurer (overall satisfaction scores of 900 and above), 75% say they “definitely will” renew their policy, compared with 12% of displeased customers (scores of 549 and lower). Satisfaction varies regionally, from a high of 825 in the Southeast region to a low of 795 in the New England region. Seven of the 11 study regions post significant decreases in overall satisfaction year over year with the greatest declines occurring in the Southwest (-20 points) and Texas (-17) regions.
Auto Insurance Company Rankings
Following are the highest-ranked car insurance brands by region:*
California: Ameriprise (846)
Central: Shelter Insurance (819)
Florida: The Hartford (834)
Mid-Atlantic: Erie Insurance (829)
New England: Amica Mutual (855)
New York: GEICO (828)
North Central: Auto-Owners Insurance (842)
Northwest: PEMCO Insurance (847)
Southeast: Farm Bureau Insurance – Tennessee (870)
Southwest: The Hartford (829)
Texas: Texas Farm Bureau Insurance (836)
*New Jersey Manufacturers Insurance Company (NJM) and USAA achieve high levels of customer satisfaction but are not included in the rankings due to the closed nature of their memberships.
Based on the study, J.D. Power offers the following consumer tips:
- Well in advance of renewing your policy, determine whether and by how much your premium will rise, and for what reason. See what other insurers are charging for comparable policies.
- Try to resolve questions or problems with your policy online before resorting to a call center, as online technologies continue to improve.
- Learn the pros and cons of working with larger national or regional insurers, compared with smaller local companies. Also, learn how these organizations overlap and interact.
About the Study
The 2016 U.S. Auto Insurance Study is based on responses from 44,681 auto insurance customers. The survey data was collected from January 29, 2016, to March 25, 2016.
 Note: Large insurers are those with more than $2 billion in direct written premium (DWP) and small insurers are those with less than $800 million in DWP.