Usage-based auto insurance takes center stage as satisfaction flatlines, J.D. Power finds

A record high number of serious collisions, skyrocketing used-vehicle prices and surging repair costs have created an unenviable scenario for auto insurers: raise rates or go out of business. It should come as little surprise that the J.D. Power 2022 U.S. Auto Insurance Study, released today, finds that customer satisfaction with the price of auto insurance has declined sharply, but notable industry efforts to improve customer engagement has kept overall customer satisfaction at a level similar to a year ago.

“The current situation is a tough one for auto insurers, but it is not impossible in the current inflationary environment to build customer satisfaction and retention,” said Robert Lajdziak, director of insurance intelligence at J.D. Power. “J.D. Power finds two bright spots in the data for insurers. First, those insurers that are transparent and notify customers in advance of price increases can blunt the negative effects of a price increase. Second, usage-based insurance is growing quickly, with an all-time high number of customers adopting these programs and due to their experience using them, overall customer satisfaction levels have significantly risen.”

Following are some of the key findings of the 2022 study:

• Rising prices stifle customer satisfaction: Overall customer satisfaction with auto insurance providers is 834 (on a 1,000-point scale), down from 835 a year ago. However, customer satisfaction with the price of their policies is 769, down a significant 5 points from 2021.
• Usage-based insurance sees record adoption: Participation in usage-based insurance programs, which use telematics technology to monitor driving habits and assign risk and pricing accordingly, has doubled since 2016, with 16% of auto insurance customers now participating in such programs. Price satisfaction among customers participating in these programs is 59 points higher, on average, than among customers overall.
• It pays to get out in front of bad news: Premium increases do not bode well for customer satisfaction, but insurers that are proactive about such increases and notify customers in advance are able to mitigate the negative effects they generate. In the past year, 59% of customers experiencing a price increase were notified in advance by their insurer—up from 44% in 2016—and overall satisfaction scores are 37 points higher, on average, among those pre-notified customers. The phone is the most effective channel for this type of notification.
• Agents benefit when customers use online self-service tools:  When customers engage with their insurer via both digital channels and live channels—such as agents or customer service representatives (CSRs)—satisfaction with the live channel increases. The reason is efficiency, as customers can handle transactions quickly while spending more valuable time with an agent or CSR. A multi-channel strategy is a successful approach, and the same is true when live channels are added for customers who primarily take a digital-first approach.

Highest-ranking auto insurers and scores, by region, are as follows:

California: Wawanesa (879) (for a third consecutive year)
Central: Shelter (866) (for a second consecutive year)
Florida: The Hartford (860)
Mid-Atlantic: Erie Insurance (867)
New England: Amica Mutual (862) (for a 10^th consecutive year)
New York: New York Central Mutual (834)
North Central: Erie Insurance (876) (for a second consecutive year)
Northwest: The Hartford (842)
Southeast: Farm Bureau Insurance - Tennessee (876) (for an 11^th consecutive year)
Southwest: State Farm (848)
Texas: Texas Farm Bureau (873) (for an 11^th consecutive year)

The 2022 U.S. Auto Insurance Study, now in its 23^rd year, examines customer satisfaction in five factors (in alphabetical order): billing process and policy information; claims; interaction; policy offerings; and price. The study is based on responses from 36,935 auto insurance customers and was fielded from January through April 2022.