Study: Rising auto insurance premiums hurt customer satisfaction

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Study: Rising auto insurance premiums hurt customer satisfaction

By Dave LaChance

According to JD Power, rising insurance premiums have dramatically reduced consumer satisfaction and caused many customers to seek lower rates. 2022 USA Insurance Buying Study.

The survey attributes carriers’ need for rate increases to “galloping demand for used vehicles that has driven prices up an average of 41% in 2021, pushing vehicle replacement and repair costs into territory unexplored”.

Over the past year, the average overall satisfaction score has dropped six points, to 862 on a 1,000-point scale, according to the survey. It found that six of the nine large insurers and six of the 11 medium-sized insurers saw their scores drop, but did not identify them.

“A perfect storm of record replacement costs, increased frequency and severity of collisions, and an economic outlook that suggests this situation will not change any time soon are forcing major disruption to the industry,” Marty Ellingsworth, Executive Managing Director property/casualty insurance information at JD Power, said in a statement.

For the first time in five years, JD Power said, consumers were more satisfied buying their policies through a direct agent than digitally. Direct sales channels, which include apps and websites, saw a sharp decline after several years of rising satisfaction, dropping 17 points to 860. Meanwhile, the exclusive agent channel was at 866 points, although that the survey did not say whether this number reflected a change. . The independent agent chain finished third, despite climbing to 854 from 848 a year ago.

Among large carriers, State Farm ranked first for price satisfaction, with a score of 885 against a segment average of 863. Among midsize carriers, The Hartford, Erie Insurance, and Amica Mutual took the top three spots, with rankings of 889, 878, and 874. The segment average is 855.

A copy of the full report was not made available.

JD Power’s Auto Insurance Loyalty Indicator and Shopping Trends report showed that recent rate increases in March and April 2022 bring purchase rates back to historic levels, although they remain lower than they were there one year old.

The top purchase drivers for retained and switched buyers are proactive price verification, 51%, and price increases, 35%. A rate increase of 11% or more was cited by 64% of those shopping for a new policy.

“Longer term, this may be the catalyst for significant adoption of usage-based insurance, which may be the only way for insurers to navigate financial realities while successfully engaging with customers and to retain them by meeting their specific needs,” said Ellingsworth.

A TransUnion survey released earlier this month found that 40% of consumers surveyed had been offered a telematics policy, up from 32% in the most recent survey in November, and that the percentage of those who had opted had risen from 49% to 65%. %.

TransUnion attributed the increase in opt-ins to consumers seeking lower premiums in response to rising insurance rates, which rose 4.3% on average, as well as rising prices in general.

JD Power’s US Insurance Buying Study is based on responses from 10,804 insurance customers who requested an auto insurance quote from at least one competing insurer in the past nine months. The study was conducted from March 2021 to January 2022.


Featured image by Tero Vesalainen/iStock

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