Category: Insurance|P&C InsuranceUnited States

Trust Emerges as Top Driver of Customer Satisfaction with Auto Insurance as Prices Continue to Surge, JD Power Finds

2024-06-07

jillian.breska

TROY, Mich.: 11 June 2024 — With U.S. auto insurance rates up 11.2% on average during the past year—and insurers still losing an average of five cents on every dollar of premium they collect—sky-high premiums do not appear to be leveling off anytime soon. According to the JD Power 2024 U.S. Auto Insurance Study,^SM released today, these rate increases do not necessarily erode customer satisfaction with auto insurers. When customers have a high level of trust in their insurer, customer satisfaction and brand advocacy increase considerably, even in the face of rate increases. However, slightly more than half (51%) of customers say they have little trust in their auto insurer.

“Auto insurers are in a tough position right now,” said Breanne Armstrong, director of global insurance intelligence at JD Power. “With repair costs still rising—and with more than 20% of vehicles involved in collisions now considered total write-offs—insurers are still losing money, despite passing along huge price increases to their customers. What’s interesting in JD Power data is that even though high premiums negatively affect customer satisfaction, those negative influences can be offset by high levels of trust that insurers will come through when they are needed.”

Following are some key findings of the 2024 study:

• Trust has huge influence on customer satisfaction and brand loyalty: The average overall satisfaction score among auto insurance customers with the highest level of trust in their insurer is 917 (on a 1,000-point scale), which is 426 points higher than among those who have the lowest level of trust in their insurer. Similarly, 90% of those in the high-trust category say they are likely to renew their policy with the same insurer vs. just 30% among those in the low-trust category.
• Most insurers miss the mark on trust: Slightly more than half (51%) of customers fall into the low-trust category, while 15% have high levels of trust and 34% have mid levels of trust.
• Trust varies by region; Florida scores lowest: The lowest trust scores are in regions with the largest proportion of insurer-initiated rate increases. Florida, where the incidence of rate increases is highest, also has the highest percentage of customers (55%) with low levels of trust.
• Managing expectations around rate increases is key component to building trust: The average trust score among customers who experience an insurer-initiated increase—but who fully understand the reasons for that increase and expect the increase—is 735. That is just one point lower than the average trust score among customers who experienced an insurer-initiated rate decrease (736).

The study measures customer satisfaction with auto insurance in 11 geographic regions. A separate category addresses usage-based insurance (UBI), along with diagnostics that influence UBI participants’ experience with their insurer’s usage-based auto products. Highest-ranking auto insurers and scores by region are as follows:

California: Auto Club of Southern CA (AAA) (684)
Central: Shelter (677) (for a fourth consecutive year)
Florida: Auto-Owners Insurance (654)
Mid-Atlantic: Erie Insurance (713) (for a third consecutive year)
New England: Amica (709)
New York: Travelers (667)
North Central: Erie Insurance (710) (for a fourth consecutive year)
Northwest: PEMCO Insurance (666)
Southeast: Alfa Insurance (693)
Southwest: CSAA Insurance Group (AAA) (683)
Texas: Texas Farm Bureau (686)
Usage-Based Insurance (UBI): Nationwide (842)

The U.S. Auto Insurance Study, now in its 25^th year, was redesigned for 2024. It measures customer satisfaction with auto insurers based on performance in seven core dimensions on a poor-to-perfect rating scale. Individual dimensions measured are (in order of importance): level of trust; price for coverage; people; ease of doing business; product/coverage offerings; problem resolution; and digital channels. This year’s study is based on responses from 41,242 auto insurance customers and was fielded from August 2023 through April 2024.

For more information about the U.S. Auto Insurance Study, visit https://www.jdpower.com/business/insurance/auto-insurance-study.

About JD Power
JD Power is a global leader in consumer insights, advisory services, and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 55 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto-shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
John Roderick; East Coast; 631-584-2200; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

Customer Satisfaction with Homeowners Insurance Property Claims Declines to 7-Year Low Amid Record Catastrophic Events and Slower-Than-Ever Repair Times, JD Power Finds

2024-03-18

jillian.breska

TROY, Mich.: 19 March 2024 — There were 28 catastrophic weather events in 2023 that each caused more than $1 billion in damage—more than any previous year—and caused a combined total of $92.9 billion in damage nationwide.¹ According to the JD Power 2024 U.S. Property Claims Satisfaction Study,^SM released today, the increase of severe storms has led to a larger number of high-severity claims and notably longer time frames for all major steps of claims—estimating the damage, paying the customer and completing the work—all negatively affecting satisfaction, which declines to the lowest level in seven years.

“Catastrophic weather events are straining an already fragile system still experiencing supply chain issues that affect the availability and cost of materials,” said Mark Garrett, director of claims intelligence at JD Power. “Resources become strained for both insurers and the contractors doing the work. Unfortunately, it’s when claims last beyond three weeks that JD Power sees things decline. When claims last less than three weeks, satisfaction improves, so it’s the longer claims that are solely responsible for the decline. Insurers are challenged to manage expectations and proactively communicate during longer claim periods as customers tend to have more questions when experiencing delays.”

Following are some key findings of the 2024 study:

• Repair cycle times through the roof: The average claims cycle time—the amount of time from reporting the claim to finished repairs—is now 23.9 days, which is more than six days longer than what was reported in the 2022 study. For claims related to catastrophic events, that average repair cycle time jumps to 34.2 days. Not surprisingly, customer satisfaction has moved in the opposite direction, falling five points to 869 (on 1,000-point scale) from a year ago. The average overall satisfaction score among customers who experienced catastrophic claims is 841.
• Live by efficiency improvements, die by efficiency improvements: Customers who use digital tools for reporting their claim or submitting photos used in the estimation process experience faster claim cycle times but don’t always have higher levels of overall satisfaction. Claims taking longer than expected are partially to blame as satisfaction drops at a greater pace among digital users than non-digital users. For example, overall satisfaction among customers reporting their claim digitally is 903 when the claim is settled in less than three weeks. That score falls to just 727 after 31 days. “Insurers are offering digital tools and managed repair partners to help streamline the process, but these efforts are met with mixed results,” Garrett said. “Customers still expect things to move along quicker so expectation management is key.”
• Higher costs take their toll amid rising premiums: Many customers are experiencing rising insurance premiums, so when they have a claim and need to cover $1,500 or more in costs, satisfaction is negatively affected, even if it is to cover their deductible. Policies often have higher deductibles for catastrophic weather (wind, hail, named storms, etc.) so as these events increase in frequency, more customers can be paying higher deductibles. JD Power has seen a five-percentage-point increase to 28% from 23% in 2022 among those spending $1,500 or more for either their deductible or out-of-pocket expenses—and satisfaction has declined 27 points among this group during that period.
• Digital is helping, but still falling short of customer expectations: Customers who use digital tools for reporting their claim and submitting photos tend to have lower severity claims and report notably faster repair cycle times of 15 days, on average. This compares with nearly 28 days among non-digital users. So, while the process is notably faster for digital users, the expectation is that it should even be shorter—those who state the process took as long as expected say they had an average repair time of only 11 days. “No time is more critical than during the initial reporting of the claim,” Garrett said. “The biggest declines in satisfaction are related to explaining the claims process to customers and showing concern for their situation. To navigate this difficult stage, insurers need to redouble their efforts to proactively manage customer expectations and streamline the claims process.”
• Service consistency is key when interacting with multiple reps: There can often be several insurance reps dealing with a customer during a claim and the consistency of service is an important driver of satisfaction. From sharing information so the customer does not need to repeat themselves to reps having similar knowledge and soft skills is critical in delivering very consistent levels of service. Among the 27% of customers who say that level was not achieved, satisfaction drops 200 points.

Study Ranking

Amica ranks highest in property insurance claims experience with a score of 906. AIG (889) ranks second and Erie Insurance (888) ranks third.

The U.S. Property Claims Satisfaction Study measures satisfaction with the property claims experience among insurance customers who have filed a claim for property damages by examining five factors (listed in order of importance): settlement; claim servicing; FNOL; estimation process; and repair process. The study is based on responses from 6,019 homeowner insurance customers who filed a claim within the previous nine months. The study was fielded from January 2023 through December 2023.

For more information about the U.S. Property Claims Satisfaction Study, visit
https://www.jdpower.com/business/resource/us-property-claims-satisfaction-study.

About JD Power
JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
John Roderick; East Coast; 631-584-2200; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

¹Source: NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2023). https://www.ncei.noaa.gov/access/billions/