JD Power and Associates 2012 Auto Insurance Study
Source: J.D. Power and Associates
Led primarily by increases in satisfaction with policy offerings and billing and payment, overall customer satisfaction with auto insurance companies has reached an all-time high, according to the J.D. Power and Associates 2012 U.S. Auto Insurance StudySM released today.
The study measures customer satisfaction with auto insurance companies across five factors: interaction; price; policy offerings; billing and payment; and claims. Overall satisfaction with auto insurance companies is 804 (on a 1,000-point scale), up 14 points from 2011. Satisfaction levels in 2012 are the highest since the study was launched in 2000.
Satisfaction increases in all factors in 2012, with significant improvements in policy offerings (+30 points) and interaction (+19 points). Satisfaction with price is essentially unchanged from 2011.
2012 Insurance Website Evaluation Study (PDF)
Source: J.D. Power & Associates
Websites have become a primary source for comparison shopping, and reading product reviews a common first step in the shopping process for many purchase decisions. As online activities become more embedded in the shopping process, refinements introduced in one industry often immediately reshape consumers’ expectations in other industries. Insurance company websites that may have been considered innovative or state of the art even a year ago may be perceived as quaint and outdated by today’s savvy insurance shoppers.
Numerous insurers have made significant investments in building websites to serve the needs of a growing segment of shoppers who want to interact and purchase personal auto insurance online. It is therefore critical for insurance companies to meet those expectations in order to continue to grow. The stakes are extremely high: in a marketplace that generated $169 billion in premiums in 2011, the 10% of customers who switched insurers during that time period represented an addressable market worth nearly $17 billion. This may explain in part why t
The J.D. Power and Associates 2012 Insurance Shopping Study SM (ISS), which was released in March, finds that insurance company websites are playing an increasingly greater role in the auto policy shopping process, whether customers are requesting a quote or simply using the website to gather contact or policy-related information. The management discussion for the ISS, titled “The Role of the Web in Shopping for Insurance,” highlights three key trends that address how the Web has influenced the auto insurance shopping process for recent shoppers (those requesting a quote in the last 12 months):
- Nearly three-fourths (73%) of insurance shoppers visit at least one insurer’s website during their shopping process
- During the past 3 years, the proportion of shoppers able to complete all their shopping activity online has increased by more than 50%, from 15% to 23% of shoppers
- More than one-third (34%) of shoppers say they would most prefer to purchase their policy online instead of through a local agent or call center
With a significant and increasing share of shoppers using insurer websites to obtain insurance quotes, as well as to find contact or policy information, the ability of websites to easily deliver this information in a clear and appealing manner may make the difference between a shopper considering a brand or bouncing to a competitor’s website that more readily meets their needs and expectations. This management discussion will provide an overview of what website design characteristics are most critical for insurers in order to provide prospect shoppers with an outstanding website experience, and draws from the detailed findings and recommendations of the J.D. Power and Associates 2012 Insurance Website Evaluation Study SM (IWES).
2012 Property Claims Satisfaction Study (PDF)
Source: J.D. Power and Associates
Last year proved to be one of the most devastating years for insurers with record breaking storm losses and some of the largest claim payouts ever recorded in the US property insurance industry. Several insurers have reported their 2011 losses rivaled the 2005 hurricane season in the Gulf. Insurers were impacted by an unprecedented number of CAT events in the US in 2011, resulting in CAT-related losses more than doubling the total reported in 2010. Figure 1 provides a historical comparison of the total number of disasters that incurred over one billion dollars in damages in a calendar year. There were a total of 14 billion-dollar events in 2011, the most ever recorded since this tracking began over 30 years ago.
In addition to the 14 billion-dollar events, according to the Insurance Information Institute, the federal government issued 99 disaster declarations in 2011, a record. Furthermore, losses due to thunderstorms (hail and tornadoes) this year exceeded $25 billion, more than double previous records and nearly one-half of all damage, according to the Insurance Information Institute. Some states were struck repeatedly throughout the year which further strained claims resources for many insurers in these regions; the months of April and May were particularly bad for tornadoes.
Due to this increase in CAT activity, J.D. Power and Associates anticipated there would be a decrease in overall claimant satisfaction in the 2012 study results due to several factors: an increased use of independent adjusters; lengthened response and claim payment times; and the availability of qualified contractors and repair materials—all of which may have lengthen the claims process and, consequently, negatively impacted satisfaction.
Online Insurance Quote Applications Now Initiate A Majority of New Policy Sales
Source: J.D. Power and Associates
For the first time, a majority of new buyers of auto insurance initiated their policy purchase by applying for a rate quote online, according to the J.D. Power and Associates 2011 U.S. Insurance Shopping StudySM released today. The importance of an insurer’s website in generating new business among new buyers has been steadily increasing for the past five years, at the expense of more traditional local agency or call center sales channels.
The study, now in its fifth year, examines consumer shopping and purchasing behaviors and overall satisfaction among buyers who recently purchased from an auto insurance provider across three factors (in order of importance): distribution channel; policy offerings; and price.
Within the distribution channel factor, the website now accounts for more than one-fourth of the importance weight, second to the local agent. In addition, more than one-half (54%) of insurance shoppers report getting their quote online.
“This transition to websites as the dominant lead-generation channel is an important shift for insurers to recognize and address in their marketing and sales strategies,” said Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates. “While nearly one-half of all accepted Web quotes are closed by either an agent or call center representative, customers are clearly more often looking to insurers’ sites or third-party sites in the early stages of the shopping process, and this behavior is blurring the lines of how we traditionally think about the discrete sales channels.”