• by Tanya Gazdik , June 23, 2014

Consumer satisfaction with auto insurance companies is reaching record-high levels, despite steady increases in prices during the past five years, according to J.D. Power.

Better communication between the companies and their customers could be what is helping smooth over the bigger hits to the pocketbook, says Jeremy Bowler, senior director of the insurance practice at J.D. Power.

"A premium increase often triggers shopping behavior, but we're seeing fewer people shopping," Bowler says. "This indicates that insurers are more effectively communicating with their customers, making them aware of the premium increases when they occur and why they're necessary, and demonstrating the value of their coverage."

The J.D. Power 2014 U.S. Auto Insurance Study measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment and claims.

Overall satisfaction with auto insurance companies increases by a significant 16 points (on a 1,000-point scale) to 810 in 2014, the highest since the study launched in 2000. The satisfaction milestone comes at a time when premiums have been trending up for the past few years.

While the percent of customers experiencing an insurer-initiated premium increase is about even to last year, 19% vs. 20% in 2013, among those who experienced a rate hike, the average increase is much lower than last year, $86 in 2014, compared with $153 in 2013.

Customer loyalty and advocacy are improving. More than half (51%) of customers say they "definitely will" renew their auto insurance policy with their current provider, up from 49% in 2013. Additionally, 49% of customers say they "definitely will" recommend their insurer to family and friends in 2014, an increase from 48% in 2013.

The auto insurance customer experience improves significantly across all factors in 2014, with the largest year-over-year increases in price (+20 points) and billing and payment (+19). Interaction, the factor with the largest impact on overall satisfaction, improves by 13 points.

The increase in price satisfaction is attributed to a rise in the percentage of customers whose premiums have remained the same during the past 12 months, compared with 2013 (55% vs. 52%, respectively), and a slight decline in the proportion of those with insurer-initiated increases.

In addition to smaller increases this year, insurers have more often notified customers of the rise in premiums through their preferred communication channel (57% in 2014 vs. 53% in 2013).

When analyzing insurance customers by attitudinal and preference-based segmentation, overall satisfaction is highest among “Loyal Advice Seekers” -- customers who are the least likely to both shop and switch carriers due to a strong relationship with their agent.  Satisfaction is lowest among “Unengaged” customers -- those who have little, if any, relationship with their insurer.

Among “Technologists” -- customers who prefer to interact through technology -- more than 60% have interacted with their insurer in the past 12 months through digital channels, such as their carrier's website and social media, and 40% have communicated exclusively via digital.

The 2014 U.S. Auto Insurance Study is based on responses from 44,661 auto insurance customers. The survey data was collected in March and April 2014.