Revealed – record lows in customer satisfaction with auto insurance providers

New report uncovers what's behind plummeting metrics

Revealed – record lows in customer satisfaction with auto insurance providers

Motor & Fleet

By Mika Pangilinan

Customer satisfaction for auto insurance in the US have plummeted to record lows amid skyrocketing rates, according to a new report by J.D. Power.

The report examined the experiences of 41,437 auto insurance customers and found that satisfaction levels have dropped significantly over the past year, with a 12-point decline on a 1,000-point scale.

This marks the largest decrease in customer satisfaction in the past two decades, the study found.

J.D. Power attributed the decline to rising insurance rates, with nearly one-third (31%) of auto insurance customers experiencing a rate hike in the past year.

On average, insurers were found to have raised rates by 15.5%, which is three times higher than the average rate of increase in other categories tracked by the Consumer Price Index.

“Overall customer satisfaction with auto insurers has plummeted this year, as insurers and drivers come face to face with the realities of the economy,” said Mark Garrett, director of insurance intelligence at J.D. Power.

One consequence of these surging rates is the increased adoption of usage-based insurance (UBI) programs, which determine the cost of a policy based on a driver’s behaviors using telematics data.

According to the study, UBI participation has more than doubled since 2016, with 17% of auto insurance customers now taking part in such programs. Customers new to an insurer were also reported to have a high participation rate of 26%.

Aside from the growing prominence of UBI programs, the J.D. Power report found that overall customer satisfaction with auto insurance providers has dropped to 822 from 834 a year ago.

Moreover, it identified specific customer groups that had a more negative reaction to price increases, including renters or those who do not bundle their home and auto insurance, single car/single driver households, customers open to switching insurers, and those with a lower perception of their insurer's trustworthiness.

“While insurers are caught between a rock and a hard place when it comes to balancing profitability with customer experience, there are several ways they can blunt the negative effects of rising costs, such as proactively offering customers UBI alternatives, clearly signaling and explaining necessary rate increases and consistently delivering on brand promises to instill trust,” said Garrett.

Customer satisfaction rankings

Overall, J.D. Power assessed customer satisfaction with auto insurance providers across 11 geographic regions. Listed below are the highest-ranking provider per region:

  • California: Wawanesa – 843 points
  • Central: Shelter – 851 points
  • Florida: State Farm – 833 points
  • Mid-Atlantic: Erie Insurance – 863 points
  • New England: GEICO – 836 points
  • New York: New York Central Mutual – 842 points
  • North Central: Erie Insurance – 844 points
  • Northwest: The Hartford – 836 points
  • Southeast: Farm Bureau Insurance - Tennessee – 866 points
  • Southwest: State Farm – 835 points
  • Texas: Auto Club of Southern California (AAA) – 839 points

Wawanesa topped California customer rankings for a second consecutive year, just like Erie Insurance in the Mid-Atlantic, New York Central Mutual in New York, the Hartford in the Northwest, and State Farm in the Southwest.

Meanwhile, Shelter was the top choice in Central for the third year in a row, as was Erie Insurance in North Central.

Among the list, only Farm Bureau Insurance – Tennessee sat at the top of its region’s rankings for more than three consecutive years, scoring the most points in the Southeast for 12 years in a row.

As for UBI providers, GEICO, Progressive and State Farm ranked the highest with a tied score of 824.

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