Dealers now have another financial constraint to explore when talking to buyers: skyrocketing insurance rates.
The just-released 2022 JD Power U.S. auto insurance study finds that rising serious collisions, rising used-car prices and rising repair costs have led insurers automobiles to raise their prices to stay in business.
“The current situation is difficult for auto insurers, but it is not impossible in the current inflationary environment to strengthen customer satisfaction and loyalty,” said Robert Lajdziak, director of insurance at JD Power..
JD Power’s report says 59% of customers who experienced a price increase were notified in advance by their insurer – up from 44% in 2016 – and overall satisfaction scores are 37 points higher, on average, among these pre-notified customers. The study also notes that phone calls are the most effective communication channel for this type of notification.
The study does not include average rate increase amounts. Bankrate analyzed S&P Global Market Intelligence and reported average car insurance rate increases of 4.9%. These rate increases affect more than 62.5 million policyholders.
Although JD Power studies show that customers are dissatisfied with insurance rates, companies that engage with these buyers about increases have a better chance of maintaining at least equal levels of satisfaction. The JD Power study found that overall customer satisfaction remained at a similar level compared to a year ago.
Although the study focused on insurers, auto dealers note that price transparency during the sales and lease process consistently earns them high customer satisfaction scores.
The study measures customer satisfaction with auto insurance across 11 geographic regions. The top-ranked auto insurers and scores on a 1,000-point scale by region are as follows:
California: Wawanesa (879) (for a third consecutive year)
Central: Shelter (866) (for a second consecutive year)
Florida: The Hartford (860)
Mid-Atlantic: Erie Insurance (867)
New England: Amica Mutual (862) (for a 10e consecutive year)
New York: New York Central Mutual (834)
North Central: Erie Insurance (876) (for a second consecutive year)
Northwest: The Hartford (842)
Southeast: Farm Bureau Insurance – Tennessee (876) (for an 11e consecutive year)
Southwest: State Farm (848)
Texas: Texas Farm Bureau (873) (for an 11e consecutive year)
The 2022 U.S. Auto Insurance Study, now in its 23rd year, examines customer satisfaction based on five factors: information on the billing process and policies; complaints; interaction; policy offers; and price. The study is based on responses from 36,935 car insurance customers and was conducted from January to April 2022.