One in 10 Canadian customers switch auto insurance carriers: J.D. Power survey

One in five Canadian auto insurance customers taking part in the J.D. Power 2014 Canadian Auto Insurance Satisfaction Study have shopped for a new insurer in the past 12 months, but just 9% have made the switch.

The study measures insurance customer experiences with their primary auto insurer in Canada. Customer satisfaction is measured across five factors (in order of importance): interaction; price; policy offerings; billing and payment; and claims. Insurers are also ranked in Ontario, Alberta and Quebec.

Each insurance company conquests less than an average of 1% of customers shopping for a new insurance policy, notes a statement from J.D. Power, which released the study results Tuesday.

Findings show that brand awareness limits the ability of most carriers to attract shoppers, who typically limit their search to an average of only 1.5 quotes.

“Even the largest national insurance companies have limited awareness,” Jeremy Bowler, senior director of the insurance practice at J.D. Power, says in the statement. “Some of the big carriers may be well-known in one city or province, but have little or no awareness outside of that market. To grow their business, they need to build brand awareness, which traditionally requires significant advertising investment,” Bowler adds.

If an insurer does win a new customer, J.D. Power advises that every touch point that insurer has with the customer is crucial and can be the difference between a loyal customer and a defector. Of these touch points, study results show the three most critical are the following:

• the annual or semi-annual renewal notice;
• when a customer contacts their insurer for non-claims-related reasons (62% of customers have contacted their insurer either directly or through an agent in the past 12 months regarding a non-claim-related issue); and
• when a customer files a claim (12% of customers filed an auto claim in the past year).

The survey also found that price – historically a key differentiator among insurance companies – is having less of an impact on overall satisfaction.

Based on a 1,000-point scale, the overall customer satisfaction of those polled drops to 758 in 2014 from 766 in 2013. The majority of the year-over-year drop is attributed to declines in satisfaction with claims (-29 points), interaction (-13 points) and billing and payment (-12 points), the statement adds. Price is the only factor in which satisfaction improves.

Policyholders in Quebec reported being most satisfied, J.D. Power reports, primarily because the provincial government insures against injuries to people, thus bodily injury coverage is not required for vehicle owners, keeping premiums lower than in other provinces. The satisfaction level in Quebec increased from 802 in the 2013 findings to 804 in the 2014 findings.

But satisfaction levels in Alberta and Ontario are both down, dropping from 747 to 744 and from 756 to 749, respectively.