J.D. Power: Higher rates mean less satisfied drivers

Penny Gusner

By

Consumer Analyst

Thumbs up and down signsJ.D. Power’s 2013 U.S. Auto Insurance Study shows that customer satisfaction on the decline -- but just by a bit.

The report finds an overall satisfaction value of 794 (out of 1,000), about 10 points lower than the 2012 study that had satisfaction rates at an all-time high. 

You won't be surprised to find out that those who are least satisfied are those whose car insurance rates are going up.

What is looked at?

The Auto Insurance Study scores on five factors:

  • Interaction
  • Price
  • Policy offerings
  • Billing and payment
  • Claims

All five categories’ satisfaction numbers fell from last year, but price and policy offerings declined the most (by 13 points each) and thus were determined to be the chief force contributing to the overall lower satisfaction by car insurance customers.

Higher rates make consumers shop around

J.D. Power’s senior director of global insurance practice, Jeremy Bowler, noted that with the 2013 study, “there is a sharp rise in the number of customers who experienced premium increases.”  The 2012 study had an average rate increase of $113; this bumped up to $153 in 2013.

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Price satisfaction has the lowest value in the study.  At 716, it’s more than 100 points lower than the average values that interaction and claims received.

Not surprisingly, there is a direct correlation between the amount of the premium increase and the amount of customers who switched auto insurance providers.  

A relatively low number of consumers, only 9 percent, decided to switch for a rate increase of $50 or less.  When the premium rose to $51 to $100, 18 percent switched, and 32 percent shopped around and changed providers when their premium increased more than $200.  (See "3 ways to save big on car insurance")

Just tell us why

It’s not only higher premiums that push car insurance consumers to shop around and change providers.  Customers want to be treated better when they’re advised their rates are on the rise.

When drivers are told in advance that their rates will go up and options are discussed prior to renewal, satisfaction is higher – in fact, 67 points higher -- than customers who didn’t get to discuss the premium increase before their renewal period, J.D. Power found.

Insurers need to learn to communicate more so that their relationship with their insureds lasts longer, sort of like a marriage. 

Sending a renewal notice with a note of the increase, as is required by state law, isn’t the same as giving the customer advance warning that a premium increase is on the way and discussing why there is an increase and if there are other options, such as changing their coverages or deductibles, to make their rates more affordable.

Let’s be honest, besides the actual protection car insurance gives them, what insurance consumers really want from auto insurers is to know why they pay as much as they do -- and if there is any way to pay less.


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