Fewer Than Half Of Vehicle Owners Trust Their Insurer Amid Surging Premiums
More than half (51 per cent) of customers have little trust in their vehicle insurer, according to J.D. Power’s 2024 US Auto Insurance Study. Only 15 per cent have high levels of trust and 34 per cent have mid-levels of trust.
The study measured customer satisfaction with vehicle insurance in 11 geographic regions, with the lowest trust scores recorded in regions with the largest proportion of insurer-initiated rate increases. Florida, where the incidence of rate increases is highest, had the highest percentage of customers (55 per cent) with low levels of trust.
However, according to J.D. Power, mistrust is not necessarily related to rapidly rising premiums. The company said that while insurance rates rose 11.2 per cent on average during the past year, when customers have a high level of trust in their insurer, satisfaction and brand advocacy increase considerably, even in the face of rate increases.
The company said “sky-high premiums” are unlikely to level off anytime soon as insurers lose an average of five cents on every dollar of premium they collect.
“Auto insurers are in a tough position right now,” said Breanne Armstrong, Director of Global Insurance Intelligence at J.D. Power. “With repair costs still rising – and with more than 20 per cent of vehicles involved in collisions now considered total write-offs – insurers are still losing money despite passing along huge price increases to their customers. What’s interesting in J.D. Power data is that even though high premiums negatively affect customer satisfaction, those negative influences can be offset by high levels of trust that insurers will come through when they are needed.”
The average overall satisfaction score among customers with the highest level of trust in their insurer was 917 (on a 1,000-point scale), 426 points higher than among those who have the lowest level of trust. Similarly, 90 per cent of those in the high-trust category say they are likely to renew their policy with the same insurer versus 30 per cent among those in the low-trust category.
J.D. Power said managing expectations around rate increases is a key component to building trust. The average trust score among customers who experience an insurer-initiated increase but who fully understand the reasons for that increase and expect the increase, was 735. This is just one point lower than the average trust score among customers who experienced an insurer-initiated rate decrease (736).
The study measures customer satisfaction with vehicle insurers based on performance in seven core dimensions on a poor-to-perfect rating scale. Individual dimensions measured are, in order of importance, level of trust, price for coverage, people, ease of doing business, product / coverage offerings, problem resolution, and digital channels. This year’s study was based on responses from 41,242 vehicle insurance customers and was fielded from August 2023 to April 2024.
