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Auto insurance is an integral supporting component of the auto industry. To have happy and content auto insurance customers with high commitment levels is perhaps the best way to grow an auto insurance business and rise above competition. This is so because satisfied customers make more recommendations, are more likely to renew their policies, and at the same time are much less sensitive to pricing offers from competitors to win them away from you.
The findings have come to light from the National Auto Insurance StudySM by JD Power. The study set out to measure customer satisfaction with auto insurance companies across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims.
The Results:
Switching Insurers
The study finds that 59 percent of customers with high commitment report they would not switch their auto insurer for any price, compared with only 9 percent of low-commitment customers who say the same.
Insurance Renewal
Auto insurers with highly satisfied customers have a renewal rate that is 9 percentage points higher, on average, than insurers whose customers report low levels of satisfaction.
Policy renewals are also much more likely among customers with high commitment levels, as 90 percent report they “definitely will” renew their auto insurance policy, compared with only 14 percent of low-commitment customers who indicate that they “definitely will” renew.
Recommendations to friends and family
Customers with low commitment levels are also much less likely to provide recommendations to friends and family (9%) compared with highly committed customers (81%). Additionally, the average number of recommendations made by customers with low commitment (1.4) is notably lower than the number of recommendations made by high-commitment customers (7.7).
The Companies' Interaction With Customers
While all factors of the auto insurance experience are important, insurers can make the greatest impact on satisfaction by focusing on and increasing customer interactions.
The experts opined that proactive, outbound communications significantly improve the customer experience. And the more engaged auto insurers are, the more satisfied customers become. Proactive measures could include resolving issues on the first contact, offering annual policy reviews, providing online access to policy information and increasing customer awareness of policy discounts, and would enhance the overall experience.
Why delighting customers is important?
First, Retaining customers is critical because in the auto insurance industry even one-percent shift in total market share can amount to a $1.6 billion dollar shift in premiums.
Second, there's intense competition in the marketplace and the consistent improvement by carriers over time signal that insurance companies has shown that simply satisfying customers isn't enough to remain competitive. Since customer expectations evolve continuously companies need to keep on improving to stay abreast with customer expectations.
The following are the top 10 companies with the best Customer Satisfaction Index scores:
Over the years the overall satisfaction across the auto insurance industry has increased. It is up from 781 points on a 1,000-point scale in 2007 to 787 in 2008. Additionally, satisfaction has increased steadily during the past five years, improving by 25 points since 2004. In 2008, eight of the 27 profiled insurance carriers demonstrate significant year-over-year-improvements in customer satisfaction.
Another, related study conducted by the Insurance Research Council (IRC), found that auto claims higher for lighter vehicles than heavier. The auto industry has recently seen a surge in demand for lighter automobiles due to the increasing gas prices. And now this study finds that the auto injury claim costs appear to be on the rise too. Reportedly, the auto injury claims are about 14.3 percent higher for passengers commuting by lighter-weight vehicles than for the heavier ones. In fact, experts also believe that that higher average claim costs associated with lighter vehicles have the potential to offset, to some extent, whatever beneficial effects might occur from less driving.
On the whole the automotive insurance market is quite competitive, and insurance companies would need to be innovative and proactive to remain competitive.
Meanwhile, if you'd like to thrill yourself in November this year, then the LA Auto Show 2008 is the exhibition to visit.
The findings have come to light from the National Auto Insurance StudySM by JD Power. The study set out to measure customer satisfaction with auto insurance companies across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims.
The Results:
Switching Insurers
The study finds that 59 percent of customers with high commitment report they would not switch their auto insurer for any price, compared with only 9 percent of low-commitment customers who say the same.
Insurance Renewal
Auto insurers with highly satisfied customers have a renewal rate that is 9 percentage points higher, on average, than insurers whose customers report low levels of satisfaction.
Policy renewals are also much more likely among customers with high commitment levels, as 90 percent report they “definitely will” renew their auto insurance policy, compared with only 14 percent of low-commitment customers who indicate that they “definitely will” renew.
Recommendations to friends and family
Customers with low commitment levels are also much less likely to provide recommendations to friends and family (9%) compared with highly committed customers (81%). Additionally, the average number of recommendations made by customers with low commitment (1.4) is notably lower than the number of recommendations made by high-commitment customers (7.7).
The Companies' Interaction With Customers
While all factors of the auto insurance experience are important, insurers can make the greatest impact on satisfaction by focusing on and increasing customer interactions.
The experts opined that proactive, outbound communications significantly improve the customer experience. And the more engaged auto insurers are, the more satisfied customers become. Proactive measures could include resolving issues on the first contact, offering annual policy reviews, providing online access to policy information and increasing customer awareness of policy discounts, and would enhance the overall experience.
Why delighting customers is important?
First, Retaining customers is critical because in the auto insurance industry even one-percent shift in total market share can amount to a $1.6 billion dollar shift in premiums.
Second, there's intense competition in the marketplace and the consistent improvement by carriers over time signal that insurance companies has shown that simply satisfying customers isn't enough to remain competitive. Since customer expectations evolve continuously companies need to keep on improving to stay abreast with customer expectations.
The following are the top 10 companies with the best Customer Satisfaction Index scores:
Over the years the overall satisfaction across the auto insurance industry has increased. It is up from 781 points on a 1,000-point scale in 2007 to 787 in 2008. Additionally, satisfaction has increased steadily during the past five years, improving by 25 points since 2004. In 2008, eight of the 27 profiled insurance carriers demonstrate significant year-over-year-improvements in customer satisfaction.Another, related study conducted by the Insurance Research Council (IRC), found that auto claims higher for lighter vehicles than heavier. The auto industry has recently seen a surge in demand for lighter automobiles due to the increasing gas prices. And now this study finds that the auto injury claim costs appear to be on the rise too. Reportedly, the auto injury claims are about 14.3 percent higher for passengers commuting by lighter-weight vehicles than for the heavier ones. In fact, experts also believe that that higher average claim costs associated with lighter vehicles have the potential to offset, to some extent, whatever beneficial effects might occur from less driving.
On the whole the automotive insurance market is quite competitive, and insurance companies would need to be innovative and proactive to remain competitive.Meanwhile, if you'd like to thrill yourself in November this year, then the LA Auto Show 2008 is the exhibition to visit.
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