Auto Insurers Beginning to Get Customer Interaction Right—J.D. Power

Insurers are beginning to get the customer interaction formula right, offering a mix of digital and live interactions that keep customers engaged with their brands across all channels.

(Image source: J.D. Power.)

Despite steadily increasing premiums, auto insurance customers are more satisfied with their carriers than ever, according to the J.D. Power 2018 U.S. Auto Insurance Study. The reason, according to the study’s findings, is that insurers are beginning to get the customer interaction formula right, offering a mix of digital and live interactions that keep customers engaged with their brands across all channels.

The research firm’s 2018 U.S. Auto Insurance Study examines customer satisfaction in five factors (in order of importance): interaction; policy offerings; price; billing process and policy information; and claims. The study is based on responses from 44,622 auto insurance customers and was fielded from February-April 2018.

Robert Lajdziak, Insurance Practice Business Consultant, J.D. Power.

“Cost is not the sole indicator of customer satisfaction in the auto insurance industry,” comments Robert Lajdziak, Insurance Practice Business Consultant, J.D. Power. “Low prices may attract new customers, but it’s service that keeps them. The auto insurers that increase customer satisfaction across all facets of the customer experience make price just one part of the overall relationship.”

More frequent use of digital interaction channels—particularly for monthly billing—also has played a major role in driving higher levels of satisfaction, according to Lajdziak. “Customer satisfaction is at its highest when customers take care of transactions themselves and save the high-value interactions for live channels,” he elaborates. “However, the increasing demand and use of digital self-service options is putting pressure on agents to evolve their value proposition to offer more products and services to help customers with complex needs and risks.”

J.D. Power presents key findings of the 2018 study as follows:

  • Record-high customer satisfaction breeds loyalty:Overall customer satisfaction with U.S. auto insurers improves in 2018 and is now at a record-high level of 826 (on a 1,000-point scale). This increase in customer satisfaction is inversely correlated with a decline in auto insurance shopping rates, which have reached a record low.
  • Insurers delivering strong omnichannel experience:Customer satisfaction improves across all factors measured in the study, with the biggest gains in billing process and policy information (+11 points); policy offerings (+10); price (+6); and interaction (+3). The gain in the billing process and policy information factor is partly driven by increased satisfaction with electronic statements and monthly billing.
  • Preference for digital interaction channels grows:Overall satisfaction tends to be highest when customers interact via a mix of online and offline methods of communication. The preference for digital forms of communication is greatest for low touch-point interactions, such as verifying payment receipt (73% digital preference); making payment (70% digital preference); and ordering proof of insurance cards (66% digital preference).
  • Transparency is key when premium increases are introduced:When there is an insurer-initiated premium increase, it is important to communicate that an increase is coming. When customers are pre-notified of a premium increase, overall satisfaction is 797. When they are not notified—which happens 49% of the time—overall satisfaction drops 49 points to 748.
  • Usage-based insurance programs grow significantly:Usage-based insurance programs, which leverage telematics technology to set insurance premiums based on how far and how safely a customer drives, are gaining converts. This year, 10% of insurance customers indicate participating in usage-based insurance programs, up from 8% in 2016 and 2017. While the most common reason for participating in a usage-based program is to obtain a discount, speeding alerts, vehicle tracking and driver coaching are gaining importance among customers currently using such programs.

Mastering the Basics

Insurers are beginning to master the basics when it comes to digital servicing, affirmed J.D. Power’s Lajdziak in an exchange with Insurance Innovation Reporter. “They have been successful in driving customers to use electronic statements and access their accounts online,” he comments. “Once customers are online or in an app, their awareness of features like setting up service alerts or selecting payment due dates increases significantly.”

When customers are more aware of what an insurer is providing, the insurer can make a stronger connection, increase satisfaction, and perhaps even sell additional products over services, Lajdziak adds. “Of course, there is still a long way to go beyond the basics,” he stresses. “Customers expect a lot more from their insurer in terms of digital servicing because expectations are being raised by the Amazons and Ubers of the world. Mobile adoption remains low in insurance, compared to areas like retail banking or credit cards. We are still waiting for our equivalent breakthrough to mobile check deposits.”

In the meantime, the key is to provide customers with options and allow them to balance transaction needs with self-service channels for simpler tasks and agent interactions for more complex tasks and guidance, Lajdziak counsels. “More often than not, customers today are going to opt for the least intrusive channel to meet their needs,” he says.

Study Rankings

Following are the highest-ranked auto insurance brands by region, according to the J.D. Power 2018 U.S. Auto Insurance Study:

California: Ameriprise
Central: Shelter
Florida: MetLife
Mid-Atlantic: Erie Insurance
New England: Amica Mutual
New York: New York Central Mutual
North Central: Auto-Owners Insurance
Northwest: PEMCO Insurance
Southeast: Farm Bureau Insurance—Tennessee
Southwest: CSAA Insurance Group
Texas: Texas Farm Bureau

Editor’s Note: Additional commentary from J.D. Power’s Lajdziak was added after initial publication.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at or (503) 936-2803.

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