Despite premium increases, auto client satisfaction high; Hartford, State Farm top ranked

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Despite steady increases in premium prices during the past five years, auto owners’ satisfaction with auto insurers reaches record-high levels, according to the J.D. Power 2014 U.S. Auto Insurance Study.

The study measures customer satisfaction across five factors: interaction; price; policy offerings; billing and payment; and claims.

In the Mid-Atlantic, The Hartford, Erie, Geico and State Farm ranked were the highest ranked, respectively; in New York, Geico, State Farm and New York Central Mutual ranked highest, respectively.

Overall satisfaction with auto insurance companies increases by a significant 16 points (on a 1,000-point scale) to 810 in 2014, the highest since the study launched in 2000. The satisfaction milestone comes at a time when premiums have been trending up for the past few years. While the percent of customers experiencing an insurer-initiated premium increase is about even to last year, 19% vs. 20% in 2013, among those who experienced a rate hike, the average increase is much lower than last year, $86 in 2014, compared with $153 in 2013.

Jeremy Bowler

Jeremy Bowler

“A premium increase often triggers shopping behavior, but we’re seeing fewer people shopping,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power. “This indicates that insurers are more effectively communicating with their customers, making them aware of the premium increases when they occur and why they’re necessary, and demonstrating the value of their coverage.”

Findings of the J.D. Power 2014 U.S. Insurance Shopping Study, released in April 2014, show that 13% of customers who experience an increase in their premiums shop for a new provider.

The auto insurance customer experience improves significantly across all factors in 2014, with the largest year-over-year increases in price (+20 points) and billing and payment (+19). Interaction, the factor with the largest impact on overall satisfaction, improves by 13 points.

The increase in price satisfaction is attributed to a rise in the percentage of customers whose premiums have remained the same during the past 12 months, compared with 2013 (55% vs. 52%, respectively), and a slight decline in the proportion of those with insurer-initiated increases.

In addition to smaller increases this year, insurers have more often notified customers of the rise in premiums through their preferred communication channel (57% in 2014 vs. 53% in 2013).

Key findings

  • Customer loyalty and advocacy are improving. More than half (51%) of customers say they “definitely will” renew their auto insurance policy with their current provider, up from 49% in 2013. Additionally, 49% of customers say they “definitely will” recommend their insurer to family and friends in 2014, an increase from 48% in 2013.
  • When analyzing insurance customers by attitudinal and preference-based segmentation, overall satisfaction is highest among Loyal Advice Seekers (867)—customers who are the least likely to both shop and switch carriers due to a strong relationship with their agent. Satisfaction is lowest among Unengaged customers (742)—those who have little, if any, relationship with their insurer.
  • Among Technologists—customers who prefer to interact through technology—more than 60% have interacted with their insurer in the past 12 months through digital channels, such as their carrier’s website and social media, and 40% have communicated exclusively via digital.
  • Most of the improvement this year at the insurer level comes from the smaller insurers in the industry. In aggregate, the 20 largest insurers, based on the amount of written premiums, improve by 10 points in 2014, compared with 2013, while the smallest insurers, those outside of the largest 30, improve by 41 points.

Regional overview

Satisfaction varies regionally from a high of 820 in the Texas and Central regions to a low of 795 in the California and New England regions. Ten of the 11 study regions post significant double-digit increases in insurer performance in 2014, with the largest improvements in the New York (+29 points) and New England (+26) regions.

  • California: Wawanesa (852) ranks highest in the California region. Ameriprise ranks second at 824 and Auto Club of Southern California Insurance Group ranks third at 822.
  • Central: Auto-Owners Insurance (853) ranks highest in the Central region, followed by Shelter (844) and State Farm (830).
  • Florida: The Hartford (827) ranks highest in the Florida region. Auto-Owners Insurance (815) and Progressive (811) follow The Hartford in the rankings.
  • Mid-Atlantic: The Hartford (833) ranks highest in the Mid-Atlantic region. Erie Insurance (830) ranks second, and GEICO and State Farm rank third in a tie (809 each).
  • New England: Amica Mutual (868) ranks highest in the New England region. State Farm (833) ranks second and Nationwide (814) third.
  • New York: GEICO and State Farm rank highest in the New York region in a tie (822 each). New York Central Mutual (811) ranks third.
  • North Central: Auto-Owners Insurance (840) ranks highest in the North Central region. State Farm (829) ranks second and Grange Insurance (826) third.
  • Northwest: PEMCO Insurance (854) ranks highest in the Northwest region, followed by The Hartford (834) and State Farm (829).
  • Southeast: Tennessee Farm Bureau (844) ranks highest in the Southeast region. North Carolina Farm Bureau (843) ranks second and Auto-Owners Insurance (839) third.
  • Southwest: State Farm (836) ranks highest in the Southwest region. Liberty Mutual and The Hartford rank second in a tie (820 each).
  • Texas: Texas Farm Bureau Insurance (852) ranks highest in the Texas region. Allstate (830) ranks second and State Farm (826) third.

New Jersey Manufacturers Insurance Company (NJM) and USAA also achieve high levels of customer satisfaction in the study, although they are not included in the rankings due to the closed nature of their respective memberships.

The 2014 U.S. Auto Insurance Study is based on responses from 44,661 auto insurance customers. The survey data was collected in March and April 2014.

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