A number of insurers may cringe at study results measuring customer satisfaction across five factors: interaction; policy offerings; billing and payment; price; and claims. According to the J.D. Power and Associates’ 2010 U.S. National Auto Insurance Study released today, overall customer satisfaction, which averaged 777 on a 1,000-point scale, decreased 10 points from 2009 study results.

The study, fielded in February and March, 2010, was based on more than 25,000 responses from auto insurance policyholders.

The decline in overall customer satisfaction in 2010 is largely attributable to declining satisfaction with price, which has decreased by more than 30 index points compared with 2009. At the same time, price also gained in relative importance as a driver of overall satisfaction.

The study found the proportion of customers who report experiencing an increase in premiums has increased significantly to 22% in 2010, compared with 17% in 2009. In addition, six in ten policyholders who have experienced a premium increase indicate they received no advance notice of the change from their insurers.

But, points out Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, economic factors play a large role in how customers perceive the level of value they are receive from carriers.

“Carriers are doing more, but being valued less—due to perception of price/value of coverage,” Bowler tells Insurance Networking News. “And year over year, even in light of this diminished perception of the value they are receiving, they are still more satisfied than last year.”

Bowler attributes much of this perception to economic factors. “Most customers are on a fixed income, and many have suffered from a lack of raises, job loss, and resultant slow-down in spending,” he says. “These customers view value and price differently. Respondents made a judgment on what they feel they get versus what they actually get.”

In fact, he adds, rates are filed and regulated, and the increases that insurers have issued have been modest (2-3%). Yet, considering the chronic pains of a down economy, perception of that increase may be exaggerated in the minds of the customers receiving the bill.

“Price satisfaction has a knock-on effect,” Bowler says, “and bill satisfaction is tied to that.”
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, says Bowler. “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,” Bowler adds.

Bowler recommends insurers rethink their go-to-market strategies to counter the effects of this perception by improving website usability and utility, offering support to agents, training reps, and taking a personal approach whenever possible to engage the customer. “Customers tend to give agents some of the highest ratings,” he says, “because a human answers their call and helps them get questions answered.”

Other ways carriers can engage the customer is by asking them to define their preferences, and then providing customized service options.  “Mobile apps are the latest example,” he says. More examples include creating bills with larger text size for policyholders over the age of 50, or offering additional discounts, and presenting the price in the context of any value-adds it might include also helps. “None of these are rocket science,” he says, “but it proves to the customer you are willing to go the extra mile for them.”

The insurer taking home the customer service prize is Amica Mutual, which, for the 11th consecutive year, ranks highest in customer satisfaction. This year, it garnered a score of 849 (out of 1,000). Erie Insurance (815) and Auto-Owners Insurance (813) follow in the rankings. New Jersey Manufacturers Insurance Co. and USAA also achieve high levels of customer satisfaction, although they are not included in the rankings due to the closed natures of their respective memberships.

While use of insurer websites 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,” said Bowler. “It’s likely that these value-added apps could contribute to brand loyalty—and even the creation of brand ambassadors.”

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