AUTO INSURANCE REPORT

Transcription

1 The Authority on Insuring Personal and Commercial Vehicles Vol. 22#39/1047 INSIDE Ranking of insurers by customer satisfaction in 11 regions. Pages 3-8 New Englanders are cranky auto insurance customers, but they do love Amica. Page 5 posts biggest gain in satisfying Florida customers. Page 6 Smaller regional insurers make their mark in customer satisfaction. Page 10 THE GRAPEVINE revised IRC: Though Very Satisfied, Auto Insurance Consumers Still Shop for Better Price Though 86% of insured drivers say they are satisfied with their auto insurance company, 25% of car owners say they have shopped for new auto insurance in the past year in search of a better price, and a third have switched to a different carrier as a result, according to a new study by the Insurance Research Council. The study was based on 1,168 survey responses. Of those shoppers, 71% said they used the Internet for their research, mostly through desktop and laptop computers. We find researching auto insurance on a phone remains cumbersome, though insurers vow to improve the experience. AIR Insurers Improve Interaction Skills And Millennials Reward Them With Higher J.D. Power Young consumers have long been the least satisfied segment of auto insurance customers. In particular, young customers are especially disappointed with the way insurers make it hard for them to interact with them, especially online. Apparently, insurers have not only been listening, but they have taken enough action to improve their prospects with this all-important group, according to Valerie Monet, director of the insurance practice at J.D. Power & Associates. Thanks largely to happier young customers in Generation Y, also known as millennials, overall customer satisfaction with auto insurance rose to a record 818 (on a scale of 1,000) in the recently released J.D. Power 2015 U.S. Auto Insurance Study. among Gen Y customers has increased the most relative to the other generations,with Gen Y rising 21 points, far ahead of Gen X, up 6; Boomers, up 4; and Pre-Boomers, down 3. Critically, satisfaction with the online experience was a key driver of Gen Y s improved mood. among Gen Y customers for their online experience has increased Please see SATISFACTION on Page Overall Reaches Record High Source: J.D. Power 2015 U.S. Auto Insurance Study Magellan Isle Dana Point, CA (949)

2 Page 2 Generation J.D. Power & Associates Customer Index Ranking For Shopping Experience and Interaction by Channel Overall Overall Interaction (All Channels) Channel- Channel- CSR Agent 2015 U.S. Auto Insurance Study 2015 U.S. Shopping Study Channel- Assisted Purchase Channel- Policy Billing and Purchase Online Price Claims Distribution Website Offerings Payment Experience Channel ( /Chat) Generation Y Generation X Baby Boomers Pre- Boomers Total Source: J.D. Power 2015 U.S. Auto Insurance Study and U.S. Insurance Shopping Study. The index is based on a 1,000-point scale. SATISFACTION Continued from Page 1 the most, compared with the other generations Gen Y: 20 points; Gen X:16; Boomers 4; and Pre-Boomers: -10. That s enormously important, and raises the question: what did insurers do, if anything, to justify this change? J.D. Power and insurers are at this moment taking this new information and working to see if there is a correlation with specific actions insurers have taken to improve their interaction with younger customers. Monet said she was confident the increase was not just because of the aging of Gen Y customers (defined by J.D. Power as born between 1977 and 1994), and we tend to agree. Though Gen Y will likely get happier with their insurers as they age, one year does not a gigantic difference make. When it comes to overall satisfaction with auto insurance, it apparently helps to get older. Even with the big improvement this year, Gen Y and Gen X are still far less satisfied than their older counterparts in nearly every category. The greatest strength continues to be agent interaction, and not just with the older customers. Monet said Gen Y satisfaction with agent interaction rose 29 points. That tells us there is more to the improved interaction scores than just improved websites because few insurers could outline profound changes in the way their agents interacted with their customers in 2015 relative to For agents who are happy to let customer service reps handle most interactions, the J.D. Power data offers a sobering warning, as CSR s get only an 845, compared to 871 for agents. Skill pays. The movements in the last two years reflect the growing importance of price in overall customer satisfaction. Although interaction with insurers (agent, call center, online, etc.) remains the most important component in satisfaction with a 30% weight, that impact is down from 41% in Price, now tied for the second most important factor, has risen to a 19% weight in satisfaction, compared to just 13% in Three years ago J.D. Power significantly enhanced its research by measuring satisfaction within regions rather than looking at it solely on a national basis. The 2015 U.S. Auto Insurance Study is based on responses from 46,256 auto insurance customers. The survey data was collected in March and April. The survey does not include Alaska or Hawaii, which together represent 0.6% of national premium. There are numerous insurers that are part of the survey and incorporated in the industry averages that are not part of the charts shown here because of small sample sizes. J.D. Power has held to the view that to earn the award for highest satisfaction, insurers must offer their products to the general public. This has excluded USAA, which is far and away the most successful insurer in the United States when it comes to customer satisfaction. Though Please see SATISFACTION on Page 3 No part of this publication may be reproduced by any form or means, including photocopying, scanning, fax or , without prior permission of the Publisher. For information call (949)

3 Page 3 J.D. Power & Associates 2015 U.S. Auto Insurance Study Customer Index Ranking Central Region California Wawanesa SoCal Auto Club 839 Ameriprise Auto-Owners Shelter 830 American Family Central Avg Esurance California Avg CSAA SoCal Auto Club Farm Bureau Mutual st Century 782 Mercury Infinity 715 California represents 11.5% of U.S. personal auto 2014 direct premium written Central region: North Dakota, South Dakota, Minnesota, Nebraska, Kansas, Iowa, Missouri, Oklahoma and Arkansas, representing 8.1% of U.S. personal auto 2014 direct premium written. Source: J.D. Power 2015 U.S. Auto Insurance Study. The index is based on a 1,000-point scale. *USAA is not included in the rankings because its insurance is available only to U.S. military personnel, active and retired, and their families. SATISFACTION Continued from Page 2 USAA sells only to military personnel and their families, it is the nation s fifth-largest auto insurer, so it could be argued that it should not be excluded when its customer list is so clearly inclusive. Other insurers understandably prefer to keep USAA on the outside looking in. NJM Insurance is also a high-scoring company that is excluded from the awards because it offers insurance only to a select group. The select group is apparently large: NJM is the second largest insurer in its home state of New Jersey. California California s role as one of the least satisfied region in 2015 is a repeat from the past, but at least the current 803 is an improvement from 795 in 2014, 777 in 2013 and 785 in Wawanesa has held the top spot for all four years of the regional survey. It held only 1.4% of the market in 2014, but it is apparently a happy 1.4%. We should note market share is down slightly from 1.5% in 2013 and 2012, so the happiness is not turning into new customers., which had its troubles elsewhere, can proudly point to a second-place finish in the nation s largest market, an improvement from fourth a year ago., though large nationally, is even smaller than Wawanesa in California, with just 1.1% of premium. Please see SATISFACTION on Page 4

4 Page 4 J.D. Power & Associates 2015 U.S. Auto Insurance Study Customer Index Ranking New England Region North Central Region Auto-Owners 834 Amica 828 Country Financial Indiana Farm Bur American Family 819 New England Avg Erie Insurance Hartford MetLife 791 Safety Ins North Central Avg Grange MetLife Michigan Farm Bur 796 Mich Auto Club 794 The Hanover Plymouth Rock 777 Arbella 775 Mapfre/Commerce North Central region: Wisconsin, Illinois, Indiana, Ohio and Michigan, representing 13.5% of U.S. personal auto 2014 direct premium written USAA New England region: Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont and Maine, representing 5.1% of U.S. personal auto 2014 direct premium written. Source: J.D. Power and Associates 2015 U.S. Auto Insurance Study. The index is based on a 1,000-point scale. *USAA is not included in the rankings because its insurance is available only to U.S. military personnel, active and retired, and their families. SATISFACTION Continued from Page 3 In the only intrastate battle of its kind, AAA Southern California, ranked fifth in market share with 8.2% and third in satisfaction, is significantly ahead of the Northern California auto club (CSAA), which ranks sixth in market share with 6.7% and 10th in satisfaction. At least CSAA is growing slightly, and the satisfaction rank is improved from 13th last year. California is the largest single-state market, with 11.4% of total national premium. Central Region Powerhouse super-regional Auto-Owners and regional Shelter hold the top spots in the Central region after overtaking in As we mentioned last year, the high ranking is of particular value to Shelter, whose three biggest states are in this region, which encompasses 8.1% of the national market. The other movements of note were the downward movement of Farm Bureau Mutual of Iowa from sixth in 2013 and fifth in 2014 to 12th in 2015, and from 10th in 2014 to 15th in the most recent survey. Industrywide satisfaction in the region was steady from a year earlier at 820. North Central Region In 2015, overall satisfaction fell in only one of 11 regions: North Central, home to 13.5% of Please see SATISFACTION on Page 5

5 Page 5 J.D. Power & Associates 2015 U.S. Auto Insurance Study Customer Index Ranking Florida Southeast Region 836 TN Farm Bureau 835 Alfa MetLife Florida Avg 829 NC Farm Bureau KY Farm Bureau Southeast Avg Auto-Owners 21st Century Auto-Owners Esurance Florida represents 7.7% of U.S. personal auto 2014 direct premium written Southeast region: Kentucky, Tennessee, North Carolina, Georgia, South Carolina, Louisiana, Mississippi, and Alabama, representing 14.8% of U.S. personal auto 2014 direct premium written Source: J.D. Power and Associates 2015 U.S. Auto Insurance Study. The index is based on a 1,000-point scale. *USAA is not included in the rankings because its insurance is available only to U.S. military personnel, active and retired, and their families. SATISFACTION Continued from Page 4 the national market and surpassed only by Florida for turmoil in the satisfaction rankings. The average index for the region fell from 816 in 2014 to 808 in Although Auto-Owners has claimed the top spot for since the first regional study in 2012, the rest of the list has changed substantially. In 2015 rose to second place with an index of 828 after languishing in 7th place with an 809 in Going the other way, Grange Insurance fell all the way to 13th and an index of 806 after luxuriating in third place in 2014 with an index of 826. New England Region In the last national rankings before J.D. Power shifted to looking at satisfaction by region, Amica Mutual took home the top spot (in the non-usaa division), and ever since the regional rankings Amica has ruled in its home states. Indeed, Amica s 866 is the highest index of any insurer (non-usaa division). Amica doesn t shine because New Englanders are inherently jolly in fact New England had the lowest regional satisfaction index in the study at 801. What is more, the 51 index point gap between Amica and second place is the largest by far, and the 65-point advantage over the regional average Please see SATISFACTION on Page 6

6 Page 6 J.D. Power & Associates 2015 U.S. Auto Insurance Study Customer Index Ranking New York Southwest Region New York Avg NY Central 802 MetLife American Family Southwest Avg CSAA New York state represents 6.1% of U.S. personal auto 2014 direct premium written. 950 Southwest region: Nevada, Utah, Colorado, Arizona and New Mexico, representing 6.1% of U.S. personal auto 2014 direct premium written. Source: J.D. Power and Associates 2015 U.S. Auto Insurance Study. The index is based on a 1,000-point scale. *USAA is not included in the rankings because its insurance is available only to U.S. military personnel, active and retired, and their families. SATISFACTION Continued from Page 5 is unmatched. Clearly, Amica customers aside, New Englanders are grumpy. An excellent barometer is, with significant operations in every region. s 815 index in New England is the lowest in any of the regions (though a few are close). It s a good thing this region has just 5.1% of the national market. We don t have to worry too much about New England s bad attitude bringing everyone else down. Florida We re extremely wary of the Florida data, given that the state average satisfaction soared from 790 in 2013 to 805 in 2014 and then to a whopping 829 in 2015, which is second highest in the nation. Monet gave us a number of areas where the state improved, but there s no easy answer. The biggest puzzler is, which was the top insurer in 2014, and second in 2013, but tumbled to eighth in Hartford may have taken some actions to upset customers, but it is hard to reconcile a satisfaction score drop from 827 to 801 in a single year especially when the rest of the market is surging upward. In other words, subscribers to the J.D. Power study should dig deeply into the data before celeplease see SATISFACTION on Page 7 950

7 Page 7 SATISFACTION Continued from Page 6 brating Florida results too much. Perhaps s Florida team can cluck a little bit about rising from the ashes of a below-average score of 804 in 2014 to a market-leading 836 in Give the Gecko a few extra waxworm treats for his performance in a state with 7.7% of the national market premium. Southeast Region The Southeast region is the largest, with 14.8% of national premium. It is remarkable for having four farm bureaus all ranked above average in its eight states. The Tennessee Farm Bureau, which has been No. 1 since 2012, is joined by second-ranked Alfa (the Alabama farm bureau), the fifth-ranked North Carolina Farm Bureau and the Kentucky Farm Bureau, which dominates its home state market, ranked sixth. pulled its Lazarus act in 2015, rising from dead last and an index of 794 in 2014 to third place with an index of 830 in With the regional average rising from 816 in 2014 to 825 in 2015, the Southeast is one of only three regions where falls below average. The Southeast is also one of four regions where comes in last. Mid-Atlantic Region Erie Insurance was a darling of the national J.D. Power surveys, so it must have been hard to cede top-dog ranking in its core Mid-Atlantic region. After leading in 2012, it was supplanted in 2013 by and in 2014 by. Both times, Erie played the bridesmaid. But in 2015 the insurer by the lake regained the top spot. The region, which is home to 13.6% of U.S. premium, saw overall satisfaction rise from 806 to, one of the stronger increases. Northwest Region The smallest region with just 4.3% of the national premium, the Northwest is dominated by large insurers, with the exception of the regional J.D. Power 2015 U.S. Auto Insurance Study Customer Index Ranking Texas TX Farm Bureau Texas Avg Texas represents 8.6% of U.S. personal auto 2014 direct premium written. Source: J.D. Power and Associates 2015 U.S. Auto Insurance Study. The index is based on a 1,000-point scale. *USAA is not included in the rankings because its insurance is available only to U.S. military personnel, active and retired, and their families. PEMCO, the top-ranked insurer for satisfaction. (Fellow regional Mutual of Enumclaw falls off the list due to small sample size.) After the average satisfaction index rose 20 points in 2014, there was a much more modest 5-point gain in 2015 to 817. New York In 2013 we celebrated the wonders of small regional insurers when New York Central Mutual topped the New York market with a 814 index in a state with a 776 average. Then everyone else in the state started to improve. The state went the other way, rising modestly to an 813 Please see SATISFACTION on Page 8 No part of this publication may be reproduced by any form or means, including photocopying, scanning, fax or , without prior permission of the Publisher. For information call (949)

8 Page 8 J.D. Power & Associates 2014 U.S. Auto Insurance Study Customer Index Ranking Mid-Atlantic Region Erie PEMCO Mid-Atlantic Avg Plymouth Rock NJM Ins Co* American Family Northwest Avg st Century Northwest Region USAA Mid-Atlantic region: Pennsylvania, New Jersey, Delaware, Maryland, Washington D.C., West Virginia and Virginia, representing 13.6% of U.S. personal auto 2014 direct premium written. Northwest region: Washington, Oregon, Idaho, Montana and Wyoming, representing 4.3% of U.S. personal auto 2014 direct premium written. Source: J.D. Power and Associates 2015 U.S. Auto Insurance Study. The index is based on a 1,000-point scale. *USAA is not included in the rankings because its insurance is available only to U.S. military personnel, active and retired, and their families. **New Jersey Manufacturers Insurance Co. is not included because it is open only to New Jersey Business & Industry Association members, New Jersey state employees, NJM s previously insured drivers and previous and current policyholders. SATISFACTION Continued from Page 7 average satisfaction index, while New York Central Mutual saw its index decline to 811 in 2014 and 802 in 2015, falling to sixth of 10 ranked insurers. That s not a big collapse, but New York interrupts the small company narrative in other regions with the top five spots occupied by top10 insurers, starting with and. Southwest Region The small Southwest region, which represents 6.1% of the national market, features s only first-place ranking, though it must share that distinction with. The Southwest is also one of only two regions where ranks better than average. Industry average satisfaction rose to 824 from 817 in 2014 and 805 in Texas Texas is most definitely an unusual region, with only one insurer the Texas Farm Bureau ranked above the statewide average. The Farm Bureau satisfaction index improved 7 points to 859 while the average rose 12 points to 832. Texas features some big changes from a year ago. dropped 25 index points, falling from second place to sixth of eight ranked insurers. USAA dropped 15 points, second most in any replease see SATISFACTION on Page 10

9 Page 9 Don t leave retention to chance. Active risk management is the best bet to engage and retain profitable risk. Active risk management enables you to monitor your entire portfolio, so you can proactively engage the right policyholders at the right time as their risk profile changes. LexisNexis Active Insights makes it possible by: Collecting a wide range of data about customers from ten thousand plus resources, including public records Analyzing the data to identify and predict changes about risks in the household Enabling you to take action in real time so you can adequately price and retain existing risks To learn more, contact your account representative or visit lexisnexis.com/risk/arm Risk Solutions Insurance LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. Other products and services may be trademarks or registered trademarks of their respective companies. Copyright 2015 LexisNexis. All rights reserved.

10 Page 10 SATISFACTION Continued from Page 8 gion. gained 12 points to rank third. How can Texas have so few insurers above average? Only insurers with 100 or more completed surveys make the charts, and Texas insurers falling short of 100 responses had strong satisfaction indices that pulled up the statewide average. As we have seen, consumers in different regions have different views of their insurers. The most satisfied region is Texas with an index of 832, followed by Florida (829), Southeast (825), Southwest (824), Mid-Atlantic (), Central (820), Northwest (817), New York (813), North Central (808), California (803) and New England (801). For what it s worth, California had one of the biggest drops in insurance premiums in the past decade or more, yet despite the importance consumers apparently place on price, California ranks low in satisfaction. We continue to be impressed by the strength of regional brands. A top-10 U.S. auto insurer tops only three of 11 regions ( in New York and Southwest and in Florida). Four regions are led by insurers with 0.3% or less in national market share: Texas Farm Bureau in Texas with $607 million in 2014 direct premium written, Tennessee Farm Bureau with $590 million in the Southeast, Wawanesa in California with $317 million, and PEMCO Mutual in the Northwest with $264 million. Among the giants, is consistently strong, though not dominant. In 2015, the company held steady with modest performances in Texas, California, the Mid-Atlantic and Central. The strongest performances were in New York, and Southwest where was at the top or tied, and in New England and Northwest, where it ranked second. struggled in Florida, Southeast and North Central, where it fell from second in 2014 to seventh in ranks higher than in only one region, Florida, and ranks below average in five regions. That is a middling performer Established 1993 Brian P. Sullivan, Editor Telephone: (949) bpsullivan@riskinformation.com Leslie Werstein Hann, Managing Editor Telephone: (908) leslie@hannwriting.com Patrick Sullivan, Associate Editor Telephone: (949) bpsullivan@gmail.com Subscription Information: (800) On the Web: Auto Insurance Report, 2015, published weekly, 48 times a year, by Risk Information Inc., Magellan Isle, Dana Point, CA It is a violation of federal law to photocopy or reproduce any part of this publication without first obtaining permission from the Publisher. ISSN: Subscription Rates: $1,087 per year in U.S. and Canada. Elsewhere $1,127 per year. in customer satisfaction is important, but s superiority to all insurers in growth, and most insurers in profit, underlines how satisfaction is only one factor of many to be considered when measuring the success of an auto insurer. Fast-growing and profitable also struggles in these rankings, exceeding the industry average in only three regions (Florida, North Central and the Southeast). The company is making progress, improving its satisfaction index in 10 regions and holding steady in the 11th. We have long contended that s customer satisfaction struggles have been tied largely to the company s significant role in the nonstandard auto market, where customers tend to pay high dollars for low coverage and face contentious claims settlement. is not alone among big insurers in its satisfaction struggles. ranks below average for customer satisfaction in eight of 11 markets.,, and rank toward the bottom in nearly every region. Clearly, many insurers still have a great deal of work to do. AIR No part of this publication may be reproduced by any form or means, including photocopying, scanning, fax or , without prior permission of the Publisher. For information call (949)