Despite auto insurers’ return to the black, some customers unhappy

Illustration of a car with an insurance checklist beside it as a young woman scrolls through auto insurance competitors on her phone. Despite-auto-insurers-return-to-the-black-some-customers-unhappy.

By Doug Bailey

After several years of financial bleeding, America’s auto insurers have finally shifted out of the red—and now they are being forced to pivot just as fast to avoid losing their most valuable customers.

According to the just-released J.D. Power 2025 U.S. Auto Insurance Study, insurers have returned to profitability for the first time in years, following an extended period marked by heavy losses, steep premium hikes, and exits from unprofitable markets. But this new era of profitability is accompanied by a tough reality: nearly four in 10 customers are not very satisfied, and many of the highest-value policyholders are ready to bolt.

“Now that insurers are shifting back into growth mode, they really need to focus on cultivating and keeping high-value customers,” said Stephen Crewdson, managing director of insurance business intelligence at J.D. Power. “But among many of those customers, overall satisfaction this year is not particularly high. To shift that perception after the past few years of significant rate increases, insurers need to focus on delivering a tailored, seamless customer experience across all channels.”

That will not be easy.

38% of customers in bottom tier of satisfaction

Customer satisfaction with auto insurers is down slightly overall, falling two points to 644 on a 1,000-point scale. But the more troubling stat is what lies beneath: 38% of all customers are clustered in the bottom tier of satisfaction, meaning they are significantly less likely to renew—and far more likely to shop for a better deal elsewhere.

Even more alarming for insurers is where the defections may be coming from. High-value customers—the ones with long tenures, multiple policies, and higher premiums—are among the least likely to renew. Only 51% say they “definitely will” stick with their current insurer. That is actually lower than both medium-value (53%) and low-value (54%) customers, flipping the conventional wisdom that loyalty tracks with value.

It is a stinging paradox for an industry that has spent the past three years slashing benefits and raising rates to stabilize its bottom line.

The J.D. Power study, now in its 26th year, surveyed more than 48,000 auto insurance customers between May 2024 and April 2025. It measures satisfaction across seven core dimensions: trust, price, people, ease of doing business, product offerings, problem resolution, and digital tools.

Service earns renewal

One clear message from this year’s data is that price might win the first sale, but it is service that earns the renewal. Customers overwhelmingly cited low cost as the main reason for choosing a new insurer. But when asked what makes them stay, it was positive claims experiences and responsive customer service that made the difference.

That means the insurers that spent the last few years building rate algorithms may now need to invest in something less quantifiable: trust and convenience.

And that’s where seamless cross-channel interaction—the ability to move easily between digital, phone, and in-person service—comes in. According to the study, customers who experience frictionless service across all channels report significantly higher trust, more satisfaction with the people they interact with, and greater ease of doing business.

For insurers, the implications are clear: retooling apps, retraining agents, and streamlining claims processes is not simply good PR—it is an urgent competitive necessity.

The study also breaks down performance by region and insurer. In New England, Amica ranked highest in customer satisfaction (735) for the second straight year. NJM Insurance Co. led the Mid-Atlantic (721), while Erie Insurance topped both the Southeast (718) and North Central (684) regions. Auto Club of Southern CA (AAA) held the top spot in California (676) for the second year in a row. Other regional leaders included Shelter (Central), Nationwide (Texas and usage-based insurance), and CSAA Insurance Group (Southwest).

Nationwide also performed best in the growing market for usage-based insurance (UBI), which tracks driving behavior through in-car devices or mobile apps. But even here, customer experience is critical. The study highlights the importance of clear communication, transparent pricing, and confidence in how the data are used.

The broader takeaway? The profitability crisis may be over, but the customer satisfaction crisis is still in full swing.

For an industry trying to move beyond the damage of rate shocks and service cutbacks, the next challenge is less about spreadsheets and more about soft skills. That means insurers will need to act less like data miners and more like customer caretakers—especially if they hope to retain the kinds of clients they can make money on.

Because while profits may have returned, trust is still lagging. And in today’s market, that is the real bottom line.