June 15, 2020 by David Gambrill
For the first time in two decades, insurance company websites in the United States have become a more popular place for consumers to buy their auto insurance than through the broker channel, a U.S. auto insurance consumer satisfaction study has found.
“We’ve seen this trend developing for several years, but this is the first time that the digital channel has become the preferred means of interacting with auto insurers, exceeding one-on-one communication with agents,” said Robert Lajdziak, senior consultant for insurance intelligence at J.D. Power, which conducted the study. “This has huge implications for the industry, because it puts the focus squarely on digital investment to notably expand, creating seamless customer touch points. It’s an area in which the major national carriers excel, versus hyper-local, albeit knowledgeable, agent networks.”
The 2020 U.S. Auto Insurance Study rates customer satisfaction in five factors (in alphabetical order): billing process and policy information; claims; interaction; policy offerings; and price. The study is based on responses from 40,123 auto insurance customers in the U.S. and was fielded in February and March this year.
J.D. Power conducts auto insurance consumer satisfaction research in Canada as well, but the 2020 Canadian study has not been released.
It’s the first time in the U.S. study’s 21-year history that company insurance websites have officially surpassed agents in terms of importance to client interaction and service by providing higher customer satisfaction, J.D. Power reports.
The top company brand names that came out ahead in the U.S. study varied by region, but they included “the usual suspects” in the digital insurance space — Allstate, State Farm, GEICO, Wawanesa, and others.
Overall customer satisfaction with auto insurers improved in 2020 to a record high of 835 (on a 1,000-point scale). “National carriers such as GEICO, State Farm and Allstate have earned some of the most significant gains, together ranking highest in six of the 11 regions in the study, aided by the growth of their digital channels,” according to J.D. Power.
The difference between consumer satisfaction with carrier websites and interactions with the broker channel was only 1%, the study found.
“Customer experience with auto insurer websites contributes more to satisfaction than agents, accounting for 34% of an insurer’s total interaction score,” J.D. Power found. “That’s one percentage point higher than in the agent channel, which accounts for 33% of total interaction satisfaction. This trend toward increased reliance on the digital channel and decreased reliance on the agent channel has been building steadily for more than a decade.”
For brokers in Canada, the “teachable moment” may be that digital interaction is increasingly becoming an important tool for consumers to buy auto insurance. There are many reasons why U.S. data may not necessarily apply in Canada; among them, Canada has an entirely different regulatory landscape in auto insurance than in the United States; to say nothing of the broker channel’s different regional characteristics north and south of the border.
J.D. Power also found that trust and loyalty were important factors in customer satisfaction. And insurers in the U.S. auto insurance study did not fare well in the trust department, the study found.
“Despite the importance of trust, only 42% of all auto insurance customers say they ‘strongly agree’ that they trust their insurer,” the J.D. Power study found.
And loyalty was largely predicated on claims history.
“Customers are least likely to renew their policies when part of an insurance claim is denied,” the study found. “Conversely, when customers have experienced a claim that was fully approved and settled, satisfaction is significantly higher and generates the greatest likelihood of renewal.
“What’s more, those customers who experienced sub-optimal claim outcomes and remained with their carrier were more diligent about understanding their policy and what it covers going forward.”
Feature photo by iStock/AndreyPopov