The Need For New Solutions
The number of customers who saw a rate hike exceeding $200 doubled during the last few years. Such a drastic increase led many customers to voice their dissatisfaction through correspondence and surveys. Of those who saw increases of more than $200, price satisfaction scores were over 185 points lower than the scores of people who had rate increases of $25 or lower. Researchers said that this finding showed the need for auto insurers to create a better value perception for their services. Also, they said that insurers must find new ways to differentiate their services to show customers how they differ from competitors.
Since unavoidable losses do not give insurers any other choice but raising premiums, they must explore additional avenues beyond those two steps to keep their customers happy. For example, they can find ways to streamline and simplify the claims process. They can also look for ways to improve or expand customer service. Some insurers now offer usage-based coverage, which is growing in popularity. Companies that take these steps will be the ones leading the industry in the coming years.
Although price dissatisfaction continued to decrease for the second year in a row, customers rated their overall satisfaction with insurers' services at 819 out of 1,000 points. This number reflected an all-time high for overall satisfaction. Researchers found that customers in areas with more hail damage claims were more likely to be dissatisfied with their premiums. One of the most interesting findings to researchers was that customers perceived companies with telematics technology as more valuable than companies that did not offer it. Telematics devices measure driving behavior and adjust premiums based on how well a driver performs and how many miles the individual travels. Customers whose insurers offered telematics devices rated their insurance companies between about 50 and 70 points higher than customers who did not have access to such technology. This was true even with customers who had significant premium increases.
Researchers also found that communication was a major factor in conveying value. They recommended that companies focus on transparency and use clear language when explaining rates and coverage. Although premium price satisfaction was poor among customers who experienced significant rate hikes, those who received notices in advance and fully understood why their premiums were increasing reported slightly higher price satisfaction scores than those who did not receive such communication.