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Satisfied Auto Insurance Customers Renew More, Refer More, Switch Less

Customers who are highly satisfied with their auto insurers renew at higher rates, make more referrals, and are less price sensitive to competitive offers than those who report low levels of satisfaction, according to the J.D. Power and Associates 2008 National Auto Insurance Study.

Moreover, auto insurers with highly satisfied customers have a renewal rate that is 9 percentage points higher, on average, than insurers whose customers report low levels of satisfaction, the study found.

Though all factors of the auto insurance experience are important, insurers can make the greatest impact on satisfaction by focusing on and increasing customer interactions, J.D. Power said.

The study measures customer satisfaction with auto insurance companies across five factors (in order of importance): interaction, policy offerings, billing and payment, price and claims.

Overall satisfaction across the auto insurance industry has increased - up from 781 points on a 1,000-point scale in 2007 to 787 in 2008. Satisfaction has increased steadily during the past five years, improving by 25 points since 2004.

In 2008, eight of the 27 profiled insurance carriers demonstrate significant year-over-year-improvements in customer satisfaction.

Amica Mutual ranks highest in customer satisfaction with auto insurance companies for a ninth consecutive year, followed by State Farm, Erie Insurance, Auto-Owners, American National Property and Casualty (ANPAC), and the Automobile Club of Southern California.

USAA, an insurance provider open only to US military personnel and their families, and therefore not included in the rankings, also achieves a high level of customer satisfaction.

Additional findings:

• 59% of customers with high commitment to their insurers said they would not switch their auto insurer for any price, compared with only 9% of low-commitment customers who say the same.
• Policy renewals are much more likely among customers with high commitment levels, as 90% report they “definitely will” renew their auto insurance policy, compared with only 14% of low-commitment customers who indicate that they “definitely will” renew.
• Customers with low commitment levels are much less likely to provide recommendations to friends and family (9%) compared with highly committed customers (81%).
• The average number of recommendations made by customers with low commitment (1.4) is much lower than the number of recommendations made by high-commitment customers (7.7).

“Intense competition in the marketplace and the consistent improvement by carriers over time signal that insurance companies recognize that merely satisfying customers is not enough to remain competitive,” said Jeff Leiman, senior director of the insurance practice at J.D. Power and Associates. “Implementing various key practices - such as resolving issues on the first contact, offering annual policy reviews, providing online access to policy information and increasing customer awareness of policy discounts - can also greatly impact satisfaction and enhance the overall experience.”

About the study: The 2008 National Auto Insurance Study is based on 21,236 responses from auto insurance policyholders who were surveyed in April and May 2008.