Canadian Underwriter

Customer satisfaction with auto insurance in Canada increases for first time in five years: J.D. Power study

May 6, 2016   by Canadian Underwriter

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Customer satisfaction with auto insurance in Canada has increased for the first time in five years, according to the J.D. Power 2016 Canadian Auto Insurance Satisfaction Study, released earlier this week.

Car Loan ApplicationThe study, now in its ninth year, measures customer satisfaction with primary auto insurers in Canada on a 1,000-point scale. Satisfaction is measured across five factors (in order of importance): non-claim interaction; price; policy offerings; billing and payment; and claims. Insurers are ranked in four regions: Alberta, Ontario, Quebec and Atlantic. The study is based on responses from nearly 11,000 auto insurance policyholders, J.D. Power noted in a press release on Wednesday.

According to the report, overall satisfaction averaged 758 in 2016, up from 750 in 2015 and the same level as in 2014. Improvements in claims (+19 points), non-claim interaction (+13), policy offerings (+6) and billing and payment (+4) contributed to the year-over-year increase in satisfaction. Satisfaction with price improved just 3 points, J.D. Power noted.

Much of the improvement noted across the country can be attributed to improvements in process and communication with customers, while very little is associated with more positive perceptions of price, the release said. For example, there has been considerable attention given to the cost of insurance given Ontario’s rate reduction strategy, which had a stated goal of reducing rates by 15% by August 2015.

While many customers saw a reduction in their auto insurance premiums, this wasn’t the case for everyone. In fact, the percentage of customers who experienced a rate increase rose to 21% in 2016 from 20% in 2015, J.D. Power reported in the release. “Still, Ontario actually posts the most significant improvement in customer satisfaction, compared with other regions – demonstrating that insurance companies can satisfy customers with items beyond price by focusing on the entire customer experience,” the release said. “Price is the only factor that doesn’t increase significantly in Ontario, improving by just 1 index point, yet claims improves by 24 points, non-claim interaction by 14 points, policy offerings by 8 points and billing and payment by 6 points, showing that customers want value over merely a low price.”

The report noted that customer satisfaction in the Ontario region averages 753, up 9 points from 2015. Customer satisfaction in the Alberta region averages 743, up 8 points from 2015. In the Atlantic region, customer satisfaction averages 768, up 6 points from 2015. And in Quebec, customer satisfaction averages 786, up 3 points from 2015.

The increase in overall satisfaction also comes at a time when there is a significant amount of consolidation in the market. Valerie Monet, director of the insurance practice at J.D. Power, said in the release that streamlining processes and improving digital self-service has been a core focus for many insurers as they look to improve the customer experience, and they are starting to see some return on that investment. “This is a notable improvement and a step in the right direction; however, it remains to be seen whether insurers can maintain this momentum through the expected significant consolidation in the market ahead,” she said.

Monet noted that there has been considerable consolidation within the market, most recently Aviva’s announcement that it will acquire RBC General Insurance. “The customer experience has the potential to suffer during large, complex mergers, but with careful planning prior to implementation it doesn’t have to,” she said. “The one thing that is certain is that customers expect these transitions to be seamless, and as these large insurers merge processes and services, they retain the best traits each brand has to offer, resulting in an improved product and service for the end consumer.”

Other survey findings include:

  • Nationally, 29% of customers indicate they were able to access their policy information online, up from 26% in 2015;
  • Gen Y (38%) has the highest incidence of accessing policy information online, 9 percentage points above the second-highest generation, Gen X (29%), and 14 percentage points above Boomers (24%). Gen Y are people born between 1977 and 1994, Gen X are those born between 1965 and 1976 and Boomers are those born between 1946 and 1964;
  • Online access to policy information has increased among all generations year over year; and
  • Satisfaction has a strong correlation to customer retention and loyalty. Among “delighted” customers (overall satisfaction scores of 900 or higher), 77% say they “definitely will” renew with their current provider and 73% say they “definitely will” recommend their provider to others. Among pleased customers (scores of 750 to 899), only 38% say they “definitely will” renew and 29% “definitely will” recommend their provider.