“Claims Process is Moment of Truth For Auto Insurance Customers”
Facing dual headwinds in the post-pandemic marketplace, auto insurers nationwide, including those serving Massachusetts, have faced persistent challenges grappling with both rising costs and extended repair cycle times. According to the newly released J.D. Power 2024 U.S. Auto Claims Satisfaction Study, there may be signs of relief.
The results from this year’s study indicates that the average repair cycle time for claims filed later in the survey period decreased to 18.9 days—a 5-day reduction from the early fielding period’s 23.9 days. This reduction offers some respite to insurers and policyholders, although repair costs continue to escalate, having risen by 26% over the past two years, with premiums following suit, increasing by 15% in the past year.
“The claims process is the moment of truth for auto insurance customers, so when they experience rate increases and then have a claim with longer-than-expected repair times and other inconveniences, their overall trust in the brand is greatly diminished,” said Mark Garrett, director of global insurance intelligence at J.D. Power. “In fact, 80% of auto insurance customers who have poor claims experiences have already left or say they plan to leave that carrier. That makes this year’s significant improvement in repair cycle times very good news for insurers and their customers. However, premium increases have created a new challenge for insurers as trust is eroding and affecting the way customers view their claims. There are still many challenges the industry needs to navigate to maintain customer loyalty.”
Key Findings from the 2024 Study:
- Repair Cycle Time Relief: The average repair cycle time has seen a modest improvement, now averaging 22.3 days across the study—a decrease from 2023’s figures. Notably, repair times steadily improved by 5 days throughout 2024, highlighting potential operational progress among insurers.
- Impact of Premium Increases on Satisfaction: Nearly half of study participants reported premium increases over the past year, with a substantial portion attributable to claims. Among customers facing claim-related rate increases, satisfaction fell by over 100 points (out of 1,000) compared to those without an increase. The impact was most pronounced among older demographics, with Boomers and Pre-Boomers reporting a 178-point decrease in trust following rate hikes.
- Digital Claims Processing: Insurers have made strides in digital claims processing, with mobile apps now receiving the highest satisfaction scores. Customers who submitted photos and received updates via app reported a higher satisfaction level (775), though this group represents only 13% of respondents. Generational differences persist, with Boomers and Pre-Boomers more hesitant to adopt fully digital claims processes.
- Communication as a Core Component: Communication remains the primary driver of a positive claims experience. Ensuring representatives are accessible, responsive, and manage expectations effectively is essential to meeting customer satisfaction. Digital tools also enhance the communication experience, allowing customers to access updates and information readily.
Top performers from the 2024 Study
NJM Insurance Co. achieved the highest satisfaction score (782), followed by Amica (746) and Erie Insurance (733). It is worth noting that six of the insurers on this year’s list hail from the New England area: Amica, Liberty Mutual, Safeco, Mapfre, The Hartford, and Travelers.
The J.D. Power 2024 U.S. Auto Claims Satisfaction Study, redesigned this year, surveyed 9,725 auto insurance customers who settled a claim within the past nine months. The study measures customer experience across eight critical areas: trust, fairness of settlement, time to settle, people, communication, ease of resolution, ease of starting the claim, and digital channel use. The 2024 survey data was collected from October 2023 through August 2024.
