Customer Satisfaction Up For Auto Insurers

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

Overall customer satisfaction with auto insurance companies is up in 2009; however, rising rates associated with the onset of a hard 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 a five-year high in customer satisfaction for 2009, driven primarily by 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 have improved significantly year over year, according to the survey, with price being the "most notable" factor contributing to overall satisfaction. In 2009, 42 percent of customers reported their premiums decreased without the customers switching to another insurer.

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

J.D. Power and Associates recommended that insurers engage customers in discussions about rate increases prior to policy renewal time to mitigate the impact on customer satisfaction.

"If history repeats itself, one could anticipate a notable decline in overall customer satisfaction as a result," Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, said in a statement. "However, such upheaval in the marketplace creates opportunities for insurers to differentiate themselves and gain a competitive advantage. Most notably, companies that compete less on price and more on quality of services or through affinity relationships may be able to mitigate some of the expected decline in satisfaction."

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

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