A record-high number of serious collisions, skyrocketing used-vehicle prices and surging repair costs create an undesirable scenario for auto insurers: raise rates or go out of business. The newly-released J.D. Power 2022 U.S. Auto Insurance Study highlights that customer satisfaction with the price of auto insurance has declined sharply. However, industry efforts surrounding customer engagement have maintained overall customer satisfaction at a level similar to the previous year.
“The current situation is a tough one for auto insurers, but it is not impossible in the current inflationary environment to build customer satisfaction and retention,” says Robert Lajdziak, director of insurance intelligence at J.D. Power. “J.D. Power finds two bright spots in the data for insurers. First, those insurers that are transparent and notify customers in advance of price increases can blunt the negative effects of a price increase. Second, usage-based insurance is growing quickly, with an all-time high number of customers adopting these programs and due to their experience using them, overall customer satisfaction levels have significantly risen.”
The 2022 U.S. Auto Insurance Study, now in its 23rd year, examines customer satisfaction in five factors (in alphabetical order): billing process and policy information; claims; interaction; policy offerings; and price. The study, fielded from January through April 2022, centers on responses from 36,935 auto insurance customers.
The following are key findings of the study:
• Higher prices: Overall customer satisfaction with auto insurance providers is 834 (on a 1,000-point scale), down from 835 a year ago. But customer satisfaction with the price of their policies is 769, down a significant five points from 2021.
• Usage-based insurance: Participation in usage-based insurance programs using telematics technology to monitor driving habits and assign risk and pricing accordingly has doubled since 2016. Sixteen percent of auto insurance customers now participate in such programs. Price satisfaction among customers participating in these programs is 59 points higher than among customers overall on average.
• The good and the bad news: Premium increases do not bode well for customer satisfaction, but insurers who are proactive about such increases and notify customers in advance can mitigate adverse effects. 59% of customers experiencing a price increase were notified by their insurer in advance in the past year; up from 44% in 2016. Overall satisfaction scores are 37 points higher, on average, among those pre-notified customers. The phone is the most effective channel for this type of notification.
• Online self-service tools: When customers engage with their insurer via both digital channels and live channels—such as agents or customer service representatives (CSRs)—satisfaction with the live channel increases. The reason is efficiency, as customers can handle transactions quickly while spending more valuable time with an agent or CSR. A multi-channel strategy is a successful approach, and the same is true when live channels are added for customers who primarily take a digital-first approach.
The study measures customer satisfaction with auto insurance in 11 geographic regions. Highest-ranking auto insurers and scores by region are as follows:
California: Wawanesa (879) (for a third consecutive year)
Central: Shelter (866) (for a second consecutive year)
Florida: The Hartford (860)
Mid-Atlantic: Erie Insurance (867)
New England: Amica Mutual (862) (for a 10th consecutive year)
New York: New York Central Mutual (834)
North Central: Erie Insurance (876) (for a second consecutive year)
Northwest: The Hartford (842)
Southeast: Farm Bureau Insurance – Tennessee (876) (for an 11th consecutive year)
Southwest: State Farm (848)
Texas: Texas Farm Bureau (873) (for an 11th consecutive year)