RESEARCH & ANALYSIS
Quality of Service Drives Auto Insurance Policy Renewal RatesWESTLAKE VILLAGE, CA (Sept. 1, 2007) - Policy retention is critical to the financial success of auto insurance carriers. To that end, a customer's experience with his or her provider is the most important element - outweighing brand image - in generating policy renewals, according to the J.D. Power and Associates (JDPA) 2007 National Auto Insurance Study released today. The study measures customer satisfaction with auto insurance carriers across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims. Carriers were scored and ranked using a 1,000-point scale. "Our customer commitment model examines the degree to which brand image, inherent costs associated with switching insurers, overall experience, and propensity to be loyal drive customer commitment and, consequently, loyalty to insurers," says Jeremy Bowler, JDPA senior director for Insurance Practice. "The study reveals that the overall service experience matters most to policyholders among all other elements within the model," Bowler continues. "Maximizing renewal rates is key to the success of every carrier, as just a 1 percent shift in market share can represent $1.6 billion in annual premiums." He adds that examples of auto insurance business practices that drive higher customer satisfaction include offering annual policy reviews, loyalty discounts, proactively providing customers with helpful information pertaining to their policy, and enhancing the Web service experience. The study finds that satisfaction with the overall insurance experience accounts for 45 percent of the customer commitment model, which specifically measures a customer's propensity to remain loyal to the current insurer. Among customers who indicate high levels of satisfaction with their carrier overall, 88 percent said they "definitely would" renew their policy with their auto insurance provider. Conversely, only 16 percent of customers who report low levels of satisfaction said they would definitely renew their policy. The study also finds that 33 percent of customers say they use the Internet to interact with their auto insurance carrier. While only 5 percent of customers report that they are unable to access their auto insurance information online, overall satisfaction among this group of customers is considerably lower compared with customers who say they are able to access their information online. For an eighth consecutive year, Amica Mutual ranks highest in customer satisfaction, followed by Erie, GEICO and State Farm, respectively. American Family and Auto-Owners rank fifth in a tie. USAA, a financial services provider open only to the U.S. military community and their families, and therefore not included in the rankings, also achieves a high level of customer satisfaction.(Source: J.D. Power and Associates)
Quality of Service Drives Auto Insurance Policy Renewal RatesWESTLAKE VILLAGE, CA (Sept. 1, 2007) - Policy retention is critical to the financial success of auto insurance carriers. To that end, a customer's experience with his or her provider is the most important element - outweighing brand image - in generating policy renewals, according to the J.D. Power and Associates (JDPA) 2007 National Auto Insurance Study released today. The study measures customer satisfaction with auto insurance carriers across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims. Carriers were scored and ranked using a 1,000-point scale. "Our customer commitment model examines the degree to which brand image, inherent costs associated with switching insurers, overall experience, and propensity to be loyal drive customer commitment and, consequently, loyalty to insurers," says Jeremy Bowler, JDPA senior director for Insurance Practice. "The study reveals that the overall service experience matters most to policyholders among all other elements within the model," Bowler continues. "Maximizing renewal rates is key to the success of every carrier, as just a 1 percent shift in market share can represent $1.6 billion in annual premiums." He adds that examples of auto insurance business practices that drive higher customer satisfaction include offering annual policy reviews, loyalty discounts, proactively providing customers with helpful information pertaining to their policy, and enhancing the Web service experience. The study finds that satisfaction with the overall insurance experience accounts for 45 percent of the customer commitment model, which specifically measures a customer's propensity to remain loyal to the current insurer. Among customers who indicate high levels of satisfaction with their carrier overall, 88 percent said they "definitely would" renew their policy with their auto insurance provider. Conversely, only 16 percent of customers who report low levels of satisfaction said they would definitely renew their policy. The study also finds that 33 percent of customers say they use the Internet to interact with their auto insurance carrier. While only 5 percent of customers report that they are unable to access their auto insurance information online, overall satisfaction among this group of customers is considerably lower compared with customers who say they are able to access their information online. For an eighth consecutive year, Amica Mutual ranks highest in customer satisfaction, followed by Erie, GEICO and State Farm, respectively. American Family and Auto-Owners rank fifth in a tie. USAA, a financial services provider open only to the U.S. military community and their families, and therefore not included in the rankings, also achieves a high level of customer satisfaction.(Source: J.D. Power and Associates)
