J.D. Power Reports: Auto Insurance Customer Satisfaction Declines Compared With 2012 Primarily Due To Higher Rates



Driven by lower satisfaction with price and policy offerings, overall customer satisfaction with auto insurance companies declines in 2013 from an all-time high in 2012, but remains comparatively high relative to the previous decade, according to the J.D. Power 2013 U.S. Auto Insurance Study released on June 24.

The study measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment, and claims. Overall satisfaction with auto insurance companies is 794 (on a 1,000-point scale), down 10 points from 2012. Despite this drop, satisfaction in 2013 is the second-highest level since the study launched in 2000. Scores across all five factors have decreased year over year, with price and policy offerings both declining by 13 points. These two factors are the primary forces contributing to lower overall satisfaction.

There is a direct relationship between the size of the premium increase and the proportion of affected customers who switch insurers. While only 9 percent of customers who experienced an annual rate increase of $50 or less switched insurers, the switching rate nearly doubles to 18 percent when the increase is between $51 and $100, and to 32 percent when the increase is more than $200.

Rather than making changes to their existing policy, many customers are opting to shop and switch to a new insurer when their rates go up. This is because many companies are not adequately notifying customers prior to sending a renewal letter or making efforts to review possible options customers may take to mitigate the impact of a rate change.

When customers receive pre-notification, and discuss their options prior to renewal, satisfaction averages 698 -- 67 points higher than among customers whose did not get to discuss a rate increase prior to renewal. The study finds that only 16 percent of customers with a rate increase indicate that they had a discussion with their insurer regarding potentially changing their coverage.