Consumers are growing weary of unexpected and unexplained rate hikes in auto insurance,
as they face an average premium increase of $153 in 2013, a 35%
increase from last year. As a result, customer satisfaction with auto
insurance companies has reversed course and declined from an all-time
high in 2012, according to a recent J.D. Power 2013 U.S. Auto Insurance Study.
Based on a 1000-point scale, overall satisfaction with auto insurance
companies is 794, down 10 points from 2012, but still the
second-highest rating since the study began in 2000.
"In 2013, there is a sharp rise in the number of customers who have experienced premium increases," says Jeremy Bowler, senior director of the global insurance practice at J.D. Power. "The dollar amount of those increases is also larger, averaging $153 in 2013, compared with an average rate increase of $113 reported in the 2012 study."
Nearly one-third (32%) of customers are most likely to switch insurers when a premium increase is greater than $200. Consumers are most dissatisfied when rate hikes are unexplained and issued without prior notice,
making them more likely to switch their policy to another insurer. Only
16% of those surveyed indicated that they had a discussion with their
insurer regarding a potential change in their coverage after a premium
increase.
"Generally, customers typically have little understanding of how
their rates are set by their insurer, or why prices may vary by
sometimes hundreds of dollars between companies when they shop for
multiple quotes," says Bowler. "We've seen many companies focus on
communicating discounts to strengthen customer perception of value. But
the introduction of personal driving data characteristics in
establishing discounts, and hence rates, represents another significant
step forward for the industry in terms of better communicating price to
customers."
The J.D. Power study measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment and claims. Scores across all five factors declined from last year.
"In today's low-interest market, many insurers are filing for new
rate structures in order to rectify underwriting losses," said Bowler.
"To prepare for the likely downturn in customer sentiment and risk of
increased attrition following a premium increase, insurers need to do a
better job of proactively reaching out to their customers and explaining
the reasons behind the rate increases."
Among the five factors, price satisfaction is lowest at 716 -- more than 100 points lower than the average scores for interaction and claims.
"In 2013, there is a sharp rise in the number of customers who have experienced premium increases," says Jeremy Bowler, senior director of the global insurance practice at J.D. Power. "The dollar amount of those increases is also larger, averaging $153 in 2013, compared with an average rate increase of $113 reported in the 2012 study."
The J.D. Power study measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment and claims. Scores across all five factors declined from last year.
Among the five factors, price satisfaction is lowest at 716 -- more than 100 points lower than the average scores for interaction and claims.
--Written by Hal M. Bundrick for MainStreet
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