J.D. Power: Increased UBI, communication have kept auto satisfaction steady
Customers aren't happy about auto rate increases, but have found value in usage-based technology and transparency from their insurers.
Customer satisfaction with auto insurance premiums has taken a dive, but stepped-up efforts within the insurance industry to improve customer engagement — including the implementation of usage-based insurance technology (UBI) — kept overall satisfaction steady from 2021 to 2022, says a new study from J.D. Power.
“The current situation is a tough one for auto insurers, but it is not impossible in the current inflationary environment to build customer satisfaction and retention,” Robert Lajdziak, director of insurance intelligence at J.D. Power, said in a press release. “J.D. Power finds two bright spots in the data for insurers. First, those insurers that are transparent and notify customers in advance of price increases can blunt the negative effects of a price increase. Second, usage-based insurance is growing quickly, with an all-time high number of customers adopting these programs and due to their experience using them, overall customer satisfaction levels have significantly risen.”
One key to keeping customers happy, even as they have to continue digging deeper in their wallets, is for insurers to be transparent about upcoming premium increases. Fifty-nine percent of customers told J.D. Power they were notified by their insurer ahead of a price increase and, on average, these pre-notified insureds reported overall satisfaction scores 37 points higher (on a 1,000 point scale) than those who weren’t.
The introduction of UBI, or telematics, technology has also played a major role in keeping customers satisfied. The utilization of these technologies, which are used to monitor driving habits and appropriately assess risk, has doubled since 2016, according to J.D. Power, and customers who participate in UBI programs reported satisfaction scores 59 points higher, on average.
The results of the study also show most insureds prefer to be able to engage with their insurer via both digital self-service and live channels. These multi-channel strategies can allow a more efficient transaction process, but still allow insureds to communicate through traditional means if preferred.