• Sat. May 18th, 2024

Shocker! Customers like their auto insurance companies less when they pay more for coverage

Bynewsmagzines

Jun 14, 2023
Shocker! Customers like their auto insurance companies less when they pay more for coverage

[ad_1]

When the pandemic started shutting everything down in 2020, auto insurance companies made an unexpected but very welcome move. Rather than continuing to charge drivers the full price for their insurance, many large companies issued refund checks or paused payments on policies as more and more people stayed home. Now, the opposite is true, as insurance rates are climbing and customer satisfaction with their insurers is souring.

A new study from J.D. Power found that 31% of auto insurance customers in the U.S. have seen their rates increase over the last year. Average pricing has climbed 15.5%, though J.D. Power notes that insurance companies lost an average of $0.12 for every dollar they collected from drivers last year. The organization’s rating system scores customer satisfaction on a 1,000-point scale, and this year’s results showed a 12-point decline in satisfaction, the largest in 20 years.

J.D. Power noted that insurers are increasingly offering usage-based insurance (UBI) to help drivers cut costs, as they can agree to share driving behavior data and pay based on how much they drive. Such pricing programs have grown in popularity, more than doubling participation numbers since 2016 and drawing 17% of insurance customers. That said, UBI has come with some hassles for insurers, including data privacy concerns from customers and challenges maintaining accurate data.

The hit to customer satisfaction is linked to how large a price increase they experienced. J.D. Power found a significant difference between customers that saw a small increase of $50 and those who had increases of $300 or more.  People participating in UBI programs expressed more satisfaction with pricing. Still, the reality is that more people are paying more for insurance, and it will likely take more than usage-based programs to stem the decline in customers’ perception of their insurance company.

Leave a Reply

Your email address will not be published. Required fields are marked *