Technology is affecting the way customers deal with their auto insurer: J.D. Power

Mainstream adoption of technology is having a major effect on the way auto insurance customers interact with their insurance provider, according to the J.D. Power & Associates 2013 Canadian Auto Insurance Satisfaction Study.  

As many as one-third of all customer interactions – an increase of as much as seven percentage points over 2012 — are completed through non-traditional channels, such as a provider’s website.

Among customers who contact their insurance company, nearly one-half (49%)—including those of agent/broker-based insurers (43%) and direct insurers (57%)—use multiple channels to contact their provider, according to J.D. Power & Associates.

“An increasing number of consumers are going to the web for their first point of contact to gather information,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power & Associates. “Auto insurers in Canada are aware of this major shift and need to continue to enhance their digital presence.”

The study, fielded from Feb. 20 to March 25, was based on responses from 11,257 auto insurance policyholders and measures customer experiences with their primary auto insurer across three regions: Ontario/Atlantic, Western and Quebec. Satisfaction is measured across five factors: interaction; price; policy offerings; billing and payment; and claims.

Across all three regions, auto insurance customers are more price-sensitive in 2013 than they were in 2012.

“Although overall satisfaction has increased in the Ontario/Atlantic region, the uptick in insurer-initiated premium increases in the Western and Quebec regions has taken a toll on overall satisfaction,” Lubo Li, senior director of the services and emerging industries division at J.D. Power & Associates, said.

In the Ontario/Atlantic region, customer satisfaction has increased by 5 points (on a 1,000-point scale) from 2012, primarily due to flat or stable premiums. Bundling also is up in this region, which means that discounts appear to be bolstering customer satisfaction. Although customers in the Ontario/Atlantic region are the most price-sensitive, possibly because there is no crown insurer presence, fewer customers reported premium price increases in 2013, J.D. Power reports.

In the Western region customer satisfaction has declined nine points from 2012, primarily due to a higher number of insurer-initiated premium increases. Roughly 27% of customers indicated an insurer-initiated increase in 2013, compared with 25% in 2012.

The Quebec region experiences the largest year-over-year decline in 2013 (-25 points) after having achieved the higher customer satisfaction score in 2012. Satisfaction with price (-45 points) and policy offerings (-27 points) significantly decreases from 2012. Fourteen percent of customers indicate that their insurer initiated a price increase, as compared to 11% in 2012.

The study finds that Canada’s auto insurer websites have lower satisfaction [746], in comparison to any other interaction channel, such as agents [818] or call centre representatives [795].

“We see from analysis and our research that continued investment in websites should be a focal point for insurers since it offers an opportunity to provide convenience and efficiency to customers, which can lift satisfaction and hence loyalty,” Bowler said. “Insurers that are able to meet the current level of customer expectations related to website usability may be able to trim costs with their call centres—through a reduction in calls volume—and provide efficient service, which can help them realize a return on investment.”

Currently younger customers are the most frequent users of websites — at a 34% usage rate— but the online usage among older customers is expected to increase.

“Pre-Boomers, who comprise about 13% of customers, are definitely more apt to want to deal directly with a person, as opposed to conducting activities online,” Li said. “However, there is a desire to transact some activities online. Gathering information is the most frequently reported reason customers visit their insurer’s website.”

Gen Y customers are more likely to purchase a policy directly from an insurer, rather than go through an agent or broker, and they tend to be more price conscious when shopping. However, when it comes to discussing more complex issues — including pricing options — they prefer to speak to a person either at a call centre or an agent or broker, similar to older customers, the study found.