Drivers get sore as car insurance premiums soar

Car insurers would probably never win a Miss Congeniality contest, but their popularity really took a dive in 2016 when they sent out their insurance premiums.

In the latest annual industrywide customer satisfaction survey from J.D. Power, a global research and marketing firm, overall satisfaction with auto insurers declined by a "significant" seven points. J.D. Power said 17 of the largest auto insurers led the slide. The overall decline was largely the result of a drop in customer satisfaction with pricing.

That's not surprising given that the Consumer Price Index for May indicated that motor vehicle insurance rose 6.6 percent year-over-year. That's a big gulp to swallow when you consider that the annual inflation rate is only about 1 percent. No wonder motorists obviously weren't happy about it.

Even though car insurance premiums have risen in the past few years, this is the first time drivers have really felt the pinch in their pocketbooks. Driver satisfaction with their insurance carriers actually reached a five-year high in 2015, up from its low in 2013, according to a J.D. Power spokesperson.

Ironically, this was "the first time in the last six years that smaller insurers achieved a higher satisfaction score than large insurers," said the survey. But price perception among customers of small insurers was likely affected by the fact that they select their insurer with the help of an independent agent, noted J.D. Power. Large insurers are deemed to be companies with more than $2 billion in direct written premiums.

Dollars and cents were a big factor, but customers were also less than satisfied with their interaction with an insurer's call center representative and their local agent. J.D. Power blamed this on the "insurers' failure to make it easy for the customers to work with them."

Failure to get an existing policy changed or to get a new one has proven tough, according to the 45,000 customers interviewed. "Insurers haven't been able to move the needle when it comes to making changes more convenient for their customers," said the survey.

In contrast, customers had "notable" satisfaction with online transactions. "Today, more and more customers are interested in communicating by digital channels," said Vice President Greg Hoeg of J.D. Power's domestic insurance operations. "The traditional call center representative may no longer be the most efficient and satisfying way to resolve an issue."

Among the highest-ranking insurers: Amica Mutual, Ameriprise (AMP), Erie Insurance (ERIE), Geico, Hartford (HIG), PEMCO Insurance and Shelter Insurance. J.D. Power isn't releasing the full survey to the public because it's designed to help insurers.

"An increasingly competitive marketplace and skyrocketing ad expenditures have placed enormous pressure on auto insurers to retain customers," said the firm. "It is imperative that insurers understand how effective they are at meeting customer needs and expectations."

But they're clearly not as effective as they used to be, according to this year's results.

J.D. Power, of course, isn't the only survey that ranks auto insurance. Loretta Worters of the Insurance Information Institute, which represents the industry, said a November 2015 Pulse Survey from the Opinion Research Corp. put auto insurers at No. 1 in favorability compared to other industries that included banking, health insurance, oil and gas, and pharmaceuticals.

  • Ed Leefeldt

    Ed Leefeldt is an award-winning investigative and business journalist who has worked for Reuters, Bloomberg and Dow Jones, and contributed to the Wall Street Journal and the New York Times. He is also the author of The Woman Who Rode the Wind, a novel about early flight.