Customer satisfaction with auto insurance industry declines, study finds

Despite technological innovations and a growing emphasis on customer service, customer contentment with auto insurance industry is declining, according to a J.D. Power claims satisfaction study.

The 2022 study showed satisfaction has declined 7 points on a 1,000-point scale to average 873, as customers are losing patience with the claims process, J.D. Power said.

“Insurers are in a tight spot with their own profitability strained and a host of external factors causing their customers to grow increasingly disillusioned with the entire claims experience,” said Mark Garrett, director of global insurance intelligence at J.D. Power.

“No one wants to wait 20-to-30 days to get your car back. It's incredibly inconvenient.”
— Mark Garrett, director, global insurance intelligence, J.D. Power

Leading the list of factors contributing to the dissatisfaction are the volume of vehicle collisions, which have returned to pre-pandemic levels, record high repair costs, historic repair shop backlogs, and limited replacement parts availability.

But, perhaps surprisingly, the results of the study could have been worse, Garrett said.
I actually expected satisfaction to drop more,” he said. “I thought, we were going to see the whole industry down, with tons of carriers down double digits. So I think the more surprising thing was that some carriers did not drop in satisfaction.”

Amica Mutual ranked highest in overall customer satisfaction with a score of 903. NJM Insurance Co. (896) ranks second and Erie Insurance (893) ranks third. Bringing up the rear was National General (838), Mercury (830) and Kemper (798).

A historically slow repair process was cited as one of the most frequent reasons for dissatisfaction.

“No one wants to wait 20-to-30 days to get your car back,” Garrett said. “It's incredibly inconvenient.”

Supply chain issues cited

This year marked the first time a majority of customers cited supply chain issues such as waiting for parts on order and repair shop backlog as reasons for delays in getting their vehicle back on the road. The average repair cycle time is nearly 17 days, compared with a pre-pandemic average of about 12 days.

The average overall satisfaction score among customers experiencing a repair cycle time greater than three weeks was 837. That score jumps 71 points to 908 when customers are given an accurate time estimate beforehand. “Being empathetic throughout the process is key, especially for the longer-tailed claims that can create more effort for customers who have questions, need updates and are trying to determine next steps,” the report said.

Rising repair costs, of course, was another factor cited, which are pressuring insurers to better manage expenses.

Focus on digital channels

“This puts the focus on digital channels as a critical tool for efficiently managing customer relationships, but not all customers want to use such channels,” the report said. “In fact, 34% of customers say they have a stronger preference for working with people than using digital contact. These customers also have a notably worse claims experience, as satisfaction is 31 points lower than among those who are equally comfortable with both people and digital as contact channels.”

When digital tools are used for delivering status updates, overall satisfaction rises 56 points, with those using text messaging having the highest levels of satisfaction. However, when digital is used to report first notice of loss via the internet or mobile app, overall satisfaction falls 4 points.

Another common complaint about the auto insurance claims process is the need to repeatedly provide the same information to different people or entities at various points in the process. Overall satisfaction scores are lowest (840) when customers interact with three or more representatives during the claims process—a decline of 13 points from a year ago. Scores are highest (912)—and have held steady year over year—when the insurer uses technology to automatically approve and route the claim.

Asked why Amica continually rates highest in the auto satisfaction study, as well as other J.D. Power surveys, Garrett said he believes the company has a culture devoted to customer service.’
Amica has been perennial winner in almost all of our studies,” he said. An I think it has to do with their customer service culture, which tends to give them a lot of leeway with their costomers. It's been part of the DNA of the company, which has been so focused on service and delivering a great experience.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].