Many Consumers Never Knew About Pandemic Auto Insurance Premium Givebacks: J.D. Power

During the COVID-19 pandemic, auto insurers voluntarily returned more than $18 billion in premiums to address the drastic reduction in driving. It turns out all that extra money didn’t make consumers any happier, if they even knew about it at all.

Overall customer satisfaction with insurers is flat after four years of steady improvement, according to the J.D. Power 2021 U.S. Auto Insurance Study.

Better marketing arguably could have made a world of difference. Approximately 52 percent of auto insurance customers were aware that their insurer gave back premiums due to pandemic-related driving slowdowns. For customers who knew about those efforts, brand impressions were much higher, the study found.

[Related: U.S. P/C Insurance Customers Aren’t Too Happy With Digital Improvements: J.D. Power]

Robert Lajdziak, senior consultant for insurance intelligence at J.D. Power, said the result reflects a dissonance fueled by poor communication.

“What we’re seeing in this year’s study is a case of insurers delivering with their actions but missing the mark on effective communication to their customers,” Lajdziak said. “The refunds provided to customers during the pandemic were significant, representing nearly 7 percent of total industry premiums, but only half of customers were even aware of them. Worse, when customers needed to communicate with their insurers, either via phone, website or chat, many came away feeling less satisfied with the result than in the past.”

For the first time since 2017, auto insurance customer satisfaction did not improve from the year before. The score remains at 835 out of 1,000, as it was in 2020.

Here are other result highlights:

• About 34 percent of auto insurance customers said they’d be into trying usage-based insurance, which relies on telematics to track customer driving habits and issue discounts based on good driving behavior. About 16 percent said they already rely on usage-based insurance, double the number five years ago.

• Customer satisfaction with the assisted online channel (chat and email functions) took a hit, declining 12 points from a year ago. Broken down further, satisfaction ratings dipped 5 points for contact center and 3 points for websites. Satisfaction with a local agent dipped 1 percent.

• About 45 percent – nearly half of auto insurance customers – said they’d switch if they could save $200 or less. Backing that up, 57 percent of respondents who recently switched when their premiums rose did so to save $200 or less.

• Among regional high scorers: Wawanesa in California, Amica Mutual in New England, State Farm in New York, Florida and the Northwest, and American Family in the Southwest.

J.D. Power’s study measured auto insurance customer satisfaction in 11 geographic regions. It examined customer satisfaction in billing process and policy information, claims, interaction, policy offerings and price. The study, fielded in February and March 2021, fielded responses from 38,938 auto insurance customers.

Source: J.D. Power