• by Karl Greenberg , June 25, 2013

People don't like having to get car insurance, but last year they liked it more than they ever have, at least since 2000. This year? Not quite as much. This year’s J.D. Power U.S. Auto Insurance Study finds that on a 1,000-point scale, satisfaction overall is pretty good at 794. Though that represents a 10-point drop versus last year, it still puts auto-insurance satisfaction at the second-highest level since the study was launched in 2000. 

The study measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment and claims. J.D. Power says, however, that scores across all five factors have decreased year-over-year, with price and policy offerings -- the main downward forces on satisfaction -- both declining by 13 points. 

"In 2013, there is a sharp rise in the number of customers who have experienced premium increases," said Jeremy Bowler, senior director of the global insurance practice at J.D. Power. "The dollar amount of those increases is also larger, averaging $153 in 2013, compared with an average rate increase of $113 reported in the 2012 study."

The company says there is a direct relationship between the size of the premium increase and the proportion of affected customers who switch insurers. For example, only 9% of customers who experienced an annual rate increase of $50 or less switched insurers. But that rises to 18%, per JDP, when the increase is between $51 and $100, and to 32% when the increase is more than $200.

One problem is that companies aren't doing enough consumer engagement around rate increases -- they aren't making enough of an effort to explain why the rates are going up, and often balance losses because of the low-interest market -- and to review possible options that customers may use to mitigate the impact. The study finds that only 16% of customers with a rate increase said they had a discussion with their insurer regarding potentially changing their coverage.

When customers receive pre-notification, and discuss their options prior to renewal, satisfaction averages 698 -- 67 points higher than among customers who did not get to discuss a rate increase prior to renewal, per the firm. 

"Generally, customers typically have little understanding of how their rates are set by their insurer, or why prices may vary by sometimes hundreds of dollars between companies when they shop for multiple quotes," said Bowler in a statement. "We've seen many companies focus on communicating discounts to strengthen customer perception of value. But the introduction of personal-driving data characteristics in establishing discounts, and hence rates, represents another significant step forward for the industry in terms of better communicating price to customers."

In the nine regions in which JDP divides the nation, national brands State Farm, The Hartford, and GEICO appear most often in the Top 3 list.