Less New Business; More Customer Satisfaction

At a time when there is less new business coming in, it may be more important than ever to satisfy the few customers darkening insurers’ doors. And, according to the J.D. Power and Associates 2009 Insurance Shopping Study, Erie Insurance is doing it best. The insurer ranks highest among auto insurance companies in satisfying new buyers with the purchase experience for a second consecutive year.

With a score of 893 on a 1,000-point scale, Erie Insurance ranked highest and performs well across all three factors driving satisfaction—distribution channel, price and policy offerings. American Family ranked second overall with a score of 891, followed by The Hartford (889) and GEICO (886).

Detailed rankings of all 23 insurers can be found here.

“For customers to be especially satisfied with their insurer during the shopping experience, it’s important for them to think about how they prefer to be served—by a local agent, a centralized call center a Web site or some combination of these three channels,” says Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “Depending on the channel favored by the customer, one insurer may be a better choice than others based on their strength in that particular channel.”

For example, the study showed that Erie Insurance and American Family sell primarily through local market insurance agents; GEICO customers are particularly pleased with the GEICO Web site; and The Hartford has strength in its call center.

Insurers’ call centers as a whole have improved according to the Contact Center Satisfaction Index (CCSI) from CFI Group. The CCSI, which employs the proven methodology of the University of Michigan's American Customer Satisfaction Index, climbed 3% to 74 on a 100-point scale. The CFI Group Contact Center Satisfaction Index surveyed more than 2,200 participants across several industries, including banks, cell phone service, credit unions, hotels and insurance. Performance varied by industry. Insurance scores climbed 5% to 79 since 2008. According to the report, customer service representatives improved across all measured areas, including courteousness, knowledge, ease of understanding, interest in helping and effectiveness in handling issues. CFI warns that the poor economic environment may have created ideal conditions for CSRs to excel.

Another possible repercussion of the economy—The J.D. Power and Associates study finds that fewer insurance customers are shopping for another provider—28%, compared with 36% in 2008. Across the industry, 90% of auto insurance providers retain their customers.

“The decline in the number of customers shopping and switching insurance providers may in part be due to the current economic situation, as many customers are employing a hunker-down mentality,” says J.D. Power and Associates’ Bowler. “Most customers would prefer to hold tight to their current provider, which they already know, rather than risk trying a new provider, particularly amid negative coverage surrounding a number of insurance providers recently.”

However, the study also finds that price is the reason cited most often for shopping for a new auto insurance provider. Among those customers who mention price as a shopping trigger, 66% say they just wanted to see if they were getting the best price, while 25% cite an actual price increase and 5% say they shopped because they received an unsolicited offer from another insurer. More than one-third of customers who shop because of price ult mately switch insurers.

“Shoppers don’t always go with the insurer providing the lowest quote—10% of shoppers say they did not purchase from the brand that offered the lowest price among the quotes they received,” said Bowler. “While price may catch the attention of potential insurance customers, low prices alone won’t retain customers in the long run without a high level of service.”