Millenials driving force behind increase in overall U.S. auto insurance satisfaction: J.D. Power study

Gen Y customers – those born between 1977 and 1994 – are the driving force behind an increase in overall auto insurance satisfaction in the United States due to improvement across all customer service interaction channels, according to the J.D. Power 2015 U.S. Auto Insurance Study released on Friday.

The study – based on responses from 46,256 auto insurance customers – examines customer satisfaction in relation to five factors: interaction; price; policy offerings; billing and payment; and claims, with satisfaction measured on a 1,000-point scale.

Overall customer satisfaction with their auto insurer has reached an all-time high of 818, an improvement of eights index points from 2014, J.D. Power noted in a press release. Satisfaction among Gen Y customers has increased the most, compared with the other generations — Gen Y: +21 points; Gen X (those born between 1965 and1976): +6; Boomers (1946-1964) +4; and Pre-Boomers (born before 1946): -3.

“The interaction factor has the greatest impact on overall customer satisfaction and is also the largest contributor to the year-over-year improvement,” J.D. Power said in the release, noting that overall interaction satisfaction among Gen Y (millennial) customers (827) is up by a “significant” 20 points from 2014.

Customer interaction preferences are changing, J.D. Power noted. Gen Y’s preference to interact exclusively through digital self-service (Web or mobile) has increased to 27% in 2015 from 21% in 2011. A similar pattern of preference is found in other generational groups (Gen X: 23% vs. 19% in 2011; Boomers: 12% vs. 10%; and Pre-Boomers: 6% vs. 4%). Among the interaction channels, satisfaction with the website experience receives the lowest average score, most notably among Gen Y customers (816, compared with 826 for Gen X, 841 for Boomers and 861 for Pre-Boomers).

“While customers across all generations are able to use online self-service for basic tasks such as making a payment and gathering information about their account, they should also be able to resolve more complex issues online,” said Valerie Monet, director of the insurance practice at J.D. Power, in the release. “It is critical for insurers to resolve customers’ service needs entirely on the website. This can drive increased use of the website and can minimize servicing costs, as unresolved issues frequently require a contact to call centers or agents, freeing their time to cultivate new business.”

Still, according to Monet, some activities are better performed through personal interactions. One-fourth (25%) of Gen Y customers indicated they would rather talk to someone in person or over the phone to discuss price changes, and 23% indicated they prefer in person or over the phone rather the website channel when they have questions about their policy coverage. “Insurers should focus their in-person resources on high-touch customer calls in which the agent’s expertise is highly valued,” J.D. Power suggested.

Other findings include:

• The incidence of resolving issues entirely via the Internet has increased for millenials to 81% (up by 2 percentage points from 2014), with similar rates across generational groups — Gen X: 82%, Boomers: 81%, and Pre-Boomers: 80%;

• Website satisfaction is 123 points lower among customers who do not resolve their issue completely via the web than among those who do (736 vs. 859, respectively);

• The level of awareness of online access to policy information among Gen Y customers (73%) is greater than among customers in the other generational groups (Gen X: 68%, Boomers: 62%, and Pre-Boomers 54%);

• Nearly nine in 10 (87%) customers overall indicate receiving communications from their insurer via their preferred method — up 2 percentage points from 2014 — compared with 81% among Gen Y customers, an increase of 5 percentage points; and

• Across all generational groups, 49% of customers say they “definitely will” recommend their current insurer (the same as in 2014) and 50% say they “definitely will” renew their policy (down 1 percentage point from 51% in 2014).