NU Online News Service, Aug. 18, 10:55 a.m.EDT

Overall customer satisfaction with auto insurance companies isup in 2009; however, rising rates associated with the onset of ahard market could lead to a negative perception among consumers,J.D. Power and Associates said.

In its recently released 2009 National Auto Insurance Study,J.D. Power and Associates noted that auto insurers have seen afive-year high in customer satisfaction for 2009, driven primarilyby low premiums. Auto insurers averaged 801 on a 1,000-point scale,J.D. Power and Associates said, up by 14 points from 2008.

More than one-half of the 32 companies ranked in 2009 haveimproved significantly year over year, according to the survey,with price being the "most notable" factor contributing to overallsatisfaction. In 2009, 42 percent of customers reported theirpremiums decreased without the customers switching to anotherinsurer.

But J.D. Power and Associates said signs of a hardening marketand rising rates could cause a decline in customer satisfaction,similar to the decline that occurred approximately 12 months afterthe start of the 2001-2002 recessionary period in the U.S. Duringthat time period, J.D. Power and Associates explained, the declinein customer satisfaction correlated with insurers raisingrates.

J.D. Power and Associates recommended that insurers engagecustomers in discussions about rate increases prior to policyrenewal time to mitigate the impact on customer satisfaction.

"If history repeats itself, one could anticipate a notabledecline in overall customer satisfaction as a result," JeremyBowler, senior director of the insurance practice at J.D. Power andAssociates, said in a statement. "However, such upheaval in themarketplace creates opportunities for insurers to differentiatethemselves and gain a competitive advantage. Most notably,companies that compete less on price and more on quality ofservices or through affinity relationships may be able to mitigatesome of the expected decline in satisfaction."

According to the survey, Lincoln, R.I.-based Amica Mutual rankedhighest in customer satisfaction among auto insurers for the 10thyear in a row, followed by State Farm; Columbia, Mo.-based ShelterInsurance; Lansing, Mich.-based Auto-Owners Insurance; Erie,Pa.-based Erie Insurance; and Bloomington, Ill.-based COUNTRYInsurance, respectively.

J.D. Power and Associates noted that New Jersey ManufacturersInsurance Company (NJM) and USAA also achieved high levels ofcustomer satisfaction, but were not included in the rankings due tothe closed natures of their respective memberships.