This is the eighth year that J.D. Powers has published its annual U.S. Shopping Study
According to the 2014 U.S. Insurance Shopping Study, increases in premiums do not drive U.S. consumers to switch their insurance as much as a poor customer experience with their existing carrier does. The study did find that 13 percent of customers decided to shop for new insurance as a result of a premium increase but, that was less than half the amount, 28 percent, who said they shopped for new insurance because of having had what the customer perceived as bad treatment with the carrier they wanted to replace.
“The insurance industry spends billions of dollars each year on advertising, and over the last seven years many of those ads have tried to entice customers with big savings,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power. “While switching to a new insurer usually results in savings, the ads make promises of savings that a growing number of new customers don’t believe they have received.”
The annual study, now in its eighth year, examines insurance consumers shopping behaviors and satisfaction and overall satisfaction with their purchases of insurance. To achieve its results, J.D. Powers culls responses from more than 169,000 shoppers throughout the nation who had requested an auto insurance price quote from at least one competitive insurance carrier within the past 9 months. As a result, the study which was conducted during the months of July 2013, October 2013 and January 2014 boasts more than 50,000 unique customer evaluations of their insurers.
Price, however, is still an important factor
While a poor experience is ultimately what spurs a consumer to shop for and ultimately switch insurers, price becomes a major concern, if not the major concern, for a customer during their final selection process after customers had decided to move their policies to a new carrier. In fact, eight out of ten of the customers that move their business select the insurer that quotes them the lowest price.
Overall, when it comes to price, this year’s study found that new-buyer satisfaction with the auto insurance purchase experience was an approximately 821 out of a 1,000 point scale. This is a seven point drop from the 2013 figures which found new-buyer satisfaction at 828. J.D. Powers says that the decline in satisfaction stems from a 17-point drop in the price factor, as price has the greatest impact on satisfaction.
Other key findings from the study
The following are the major key findings from the survey as outlined by J.D. Powers:
- On average, customers saved $300 when switching insurers in the past 12 months. The longer
customers had been with their previous insurer, the greater the savings when they switched carriers, likely because they had been experiencing rate increases.
- Customers who were with their prior insurer for 11 years or longer before switching save an average of $426 per year on their premiums, compared with $291 among those who had been with their previous insurer less than two years before switching. Moreover, satisfaction among customers who had been with their insurer 11 years or longer prior to switching is higher than among those who were with their insurer fewer than two years (855 vs. 820, respectively).
- Insurers that achieve high satisfaction scores by providing an outstanding experience also retain a higher percentage of those customers and have fewer new customers shopping.
- Among customers who are highly satisfied in their first year with their insurer (overall satisfaction scores of 850 or higher), 81 percent remain with that insurer and only 41 percent shop other insurers.
- Among customers with lower satisfaction in the first year (809 or lower), only 61 percent remain with that insurer and 61 percent shop.
- Rate increases do not drive customers to shop as much as poor service does, as customers are tolerant of a certain level of rate increases. However, rate hikes of more than $200 can triple the rate of customers who switch insurers.
Who had the highest Customer Satisfaction Index Rating
In addition to measuring consumer satisfaction during the insurance purchasing process, the study also sought to rank insurers based on selected customer satisfaction criteria. The following graphic, compiled by J.D. Powers, lists which insurers had the highest Customer Satisfaction Index Rating this year. As in other years, the number score for each insurer is based upon a 1,000 point scale.