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Auto Insurers Continue to Miss the Mark to Improve the Customer Experience in Canada
TORONTO: 1 May 2015 — While auto insurers have been able to improve customer satisfaction with price, they continue to miss the mark in interactions around claims and other service experiences, resulting in a decline in overall satisfaction for a third consecutive year, according to the J.D. Power 2015 Canadian Auto Insurance Satisfaction Study SM released today.
The study, now in its eighth year, measures customer satisfaction with their primary auto insurer in Canada. Satisfaction is measured across five factors (in order of importance): non-claim interaction; price; policy offerings; billing and payment; and claims. Insurers are ranked in four regions (in alphabetical order): Alberta, Atlantic, Ontario and Quebec. Satisfaction is measured on a 1,000-point scale.
Overall customer satisfaction with their auto insurance experience declines nationally to 750 from 758 in 2014, despite an improvement in price satisfaction. Customer satisfaction declines significantly in four of the five factors in 2015: non-claim interaction (-15 points); policy offerings (-11); billing and payment (-7); and claims (-14).
In the 2015 study, more customers indicate experiencing problems when interacting with their insurer than in 2014. Additionally, there has been a significant increase in the number of customers being charged billing-related fees year over year, while fewer customers say they “completely” understand their bill.
- Satisfaction with the call centre sub factor is down a significant 20 index points to 781 from 801 in 2014 due to challenges with the promptness of speaking to a person, courtesy and timeliness of resolving customers’ requests.
- Regarding first-contact resolution using a call centre, 63 percent of customers wait no more than one minute to interact with a representative—a 5 percentage point decline from 2014—and 63 percent of customers resolve their issue the same day, down 6 percentage points from 2014.
- Overall satisfaction with the website sub factor declines to 747 from 770 in 2014. While many customers indicate resolving their issue via the website, satisfaction with other website interactions has declined, including (in order of importance) timeliness of resolving a request; appearance of the website; ease of navigating the website; and clarity of the information provided.
“Insurers are failing to meet customer expectations on some of the basics of the service experience, especially in the areas of problem prevention and communication,” said Valerie Monet, director of the insurance practice at J.D. Power. “As pricing becomes increasingly competitive, insurers may see some initial improvements in customer satisfaction; however there is significant risk of an increase in customer attrition if known service issues are not addressed.”
Price is the only factor that improved year over year (+4 points), driven largely by improvements in Ontario where price satisfaction is up by 12 points to 693 from 681 in 2014.
- One of the largest contributors to the improvement in price satisfaction is that fewer customers have experienced a price increase in 2015, compared to 2014, with 80 percent indicating their premium has remained the same or that the change is due to their own customer-initiated policy modifications.
- Quebec is the only region in which price satisfaction has declined significantly year over year—down by 12 points to 736 from 748 in 2014. In Quebec, 20 percent of customers have experienced an insurer-initiated premium increase in the past 12 months, a significant 5 percentage point jump from 2014. Further, the proportion of customers indicating they had a conversation with their insurer about the increase is down significantly to 34 percent from 45 percent in 2014.
“Insurers have done a great deal to improve customer sentiment regarding price, especially in Ontario, but the service experience hasn’t improved. In fact, it’s gotten worse,” said Monet. “Price is just one element of the experience, but the reality is that the interactions customers have while working with their insurer and an insurer’s ability to educate and manage customer expectations are equally important. Fast, efficient and personal service can’t be an afterthought to a competitive offering.”
Satisfaction Increases with Usage-Based Insurance Programs
A number of insurers are offering usage-based insurance (UBI) programs as a means to provide a more competitive product in the marketplace. These products typically measure the time of day a customer drives, how far they drive and how quickly they accelerate and brake. In exchange for sharing personal driving habit information, customers may receive a rate discount.
According to Monet, “While price is a primary reason to participate, the interactive nature of the product paves the way for more frequent communications with customers. Here, the insurer can educate customers on how their premium is calculated and simultaneously discuss how their driving habits may be affecting their rate.”
Satisfaction increases when UBI programs are offered. On average, the overall customer satisfaction index score is 750. However, overall satisfaction increases to 767 when a UBI program is offered and decreases to 744 when it is not offered. Among customers participating in a UBI program, satisfaction with their insurer is 790. It should be noted that satisfaction declines to 690 among those who have participated in the past but later choose to opt-out. While the greatest lift in customer satisfaction is in the price factor, satisfaction in the non-claim interaction and billing and payment factors is also higher among program participants.
The most prevalent reason UBI participants cite for trying the product is receiving a discount on their policy (82%), followed by having more control over pricing based on their actual driving (66%). Awareness of whether UBI programs are offered is a barrier to participation and the most frequently cited reason for not participating is privacy concerns. Despite the fact that customers frequently cite privacy concerns as a reason for not participating, 60 percent of customers who don’t currently participate in a UBI program say they would participate if their insurer offered it.
Customer satisfaction in the Alberta region averages 735, down 9 points from 2014. The Co-operators ranks highest in satisfaction in Alberta with a score of 749 for a second consecutive year. Aviva Insurance ranks second (739), followed by Intact Insurance (737).
In the Atlantic region, customer satisfaction averages 762. The Co-operators and TD Insurance tie for the highest rank position in this region (767 each), followed by Intact Insurance and Wawanesa in a tie for second (763 each).
Customer satisfaction in the Ontario region averages 744, down 5 points from 2014. The Personal (766) ranks highest in Ontario, followed by The Co-operators (765) and Belairdirect (762).
In the Quebec region, customer satisfaction declines by 21 points from 2014 to 783. In Quebec, The Personal ranks highest for a third consecutive year, with a score of 794. Belairdirect ranks second (791) and Industrial Alliance and La Capitale rank third in a tie (786 each).
The 2015 Canadian Auto Insurance Satisfaction Study is based on responses from more than 11,000 auto insurance policyholders. The study was fielded between January and March 2015.