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Study Finds Customers Less Satisfied with Auto Insurance Companies

By: Jeff Youngs, 4/24/2014
Declining satisfaction with the price of insurance is the primary reason that consumers are less satisfied overall with their new auto insurance company after switching insurance carriers, according to the J.D. Power 2014 U.S. Insurance Shopping Study.SM Among auto insurers included in this year's study, Erie Insurance ranked highest in satisfaction, followed by MetLife and State Farm in a tie, and American Family and Ameriprise in a tie.

"The insurance industry spends billions of dollars each year on advertising, and over the last seven years many of those ads have tried to entice customers with big savings," said Jeremy Bowler, senior director of the insurance practice at J.D. Power. "While switching to a new insurer usually results in savings, the ads make promises of savings that a growing number of new customers don't believe they've received."

The study finds that 30% percent of auto customers shopped for a new insurance provider in 2013, among whom 36% ultimately switched insurers.

According to the study, price is still important in the selection process, with 80% of customers selecting the lowest-priced company, resulting in an average savings of $300 annually. Yet, once they've switched, price dissatisfaction is the primary reason they are less satisfied with their new company.

J.D. Power finds that people change car insurance companies primarily due to poor service, not because of increases in premiums as customers are tolerant of a certain level of rate increases. While 13% of customers shopped for new insurance because of a premium increase, 28%--more than double the rate--shopped for new insurance because of a poor experience. However, when premiums increase by more than $200 per year, customers switch insurance companies at the triple the rate.

The 2014 U.S. Insurance Shopping Study is based on responses from more than 16,900 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 9 months and includes more than 50,000 unique customer evaluations of insurers. The study was fielded in July 2013, October 2013 and January 2014. For more details and full rankings for all of the insurance companies included in the study, visit JDPower.com.

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