Auto insurance

Usage-based auto insurance is getting more popular, along with top 3 insurers by region

With the prices of many things rising this year in today’s economy, this news probably won’t come as a surprise. Auto insurance premiums are on the rise in 2022. Bankrate reports that across the country, auto insurers are demanding rate changes – with an average rate increase of about 4.9% according to quoted data from S&P Global Market Intelligence. (Rate changes don’t usually affect everyone equally. Read more about the process in the Bankrate report.)

This brings us to JD Power’s new 2022 study of car insurance in the United States. JD Power researchers say insurers are forced to rease rate – if not go out of business. The researchers cite a number of supporting factors: a record number of serious collisions, soaring prices for used vehicles and soaring repair costs. As a result, the study finds a sharp drop in customer satisfaction with the price of car insurance. Yet overall customer satisfaction remains somewhat at a similar level year over year. Something JD Power attributes to “notable” industry efforts to improve customer engagement.

User-based insurance is gaining popularity

The study of more than 36,000 motorists also found that the most satisfied insurance customers according to the study were those with usage-based insurance (UBI). UBI is insurance that requires you to allow your car to transmit telematics data, such as mileage and driving behavior, directly to your insurer, which in turn helps determine how much you pay. (Toyota and Ford participate in usage-based insurance plans.)

“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 intelligence at JD Power. “JD Power finds two bright spots in insurer data. First, insurers who are transparent and notify customers in advance of price increases can mitigate the negative effects of a price increase. Second, insurance based usage is growing rapidly, with a record number of customers adopting these programs and as a result of their experience using them, overall customer satisfaction levels have increased significantly.”

Main conclusions

Here are some of the key findings from the 2022 study, as noted in JD Power’s press release:

  • Rising prices stifle customer satisfaction: Overall customer satisfaction with auto insurance providers is 834 (on a 1,000-point scale), up from 835 a year ago. However, customer satisfaction with the price of their policies is 769, down a significant 5 points from 2021.
  • Usage-based insurance sees record adoption: Participation in usage-based insurance programs, which use telematics technology to monitor driving habits and allocate risk and prices accordingly, has doubled since 2016, with 16% of auto insurance customers now participating to these programs. Price satisfaction among customers participating in these programs is 59 points higher, on average, than that of all customers.
  • It pays to come out in front of the bad news: Premium increases do not bode well for customer satisfaction, but insurers who are proactive about such increases and inform customers in advance are able to mitigate the negative effects they generate. Over the past year, 59% of customers experiencing 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 phone is the most effective channel for this type of notification.
  • Agents benefit when customers use online self-service tools: When customers interact with their insurer through digital channels and live channels, such as agents or customer service representatives (CSRs), satisfaction with the live channel increases. The reason for this is efficiency, as clients can process transactions quickly while spending more valuable time with an agent or CSR. A multi-channel strategy is a successful approach, and so is when live channels are added for customers who primarily take a digital approach.

Regional takeaways

The study also looked at auto insurance customer satisfaction across 11 geographic regions. We’ve listed the top three ranked auto insurers by region, as calculated by JD Power in their study.

  1. Wawanesa (for a third consecutive year)
  2. Automobile Club of Southern California (AAA)
  3. CONNECT by American Family
  1. Texas Farm Bureau (for an 11e consecutive year)
  2. state farm
  3. GEICO (below average for the region)
  1. Accommodation (for a second consecutive year)
  2. American family
  3. GEICO
  1. The Hartford
  2. Allstate
  3. Automobile Group Club (AAA)
  1. Erie Insurance
  2. Travelers
  3. state farm
New England:
  1. Amica Mutuelle (for a 10e consecutive year)
  2. state farm
  3. Plymouth Rock Insurance
New York:
  1. New York Central Mutual
  2. state farm
  3. GEICO
  • Erie Insurance (for a second consecutive year)
  • COUNTRY Financial
  • state farm
North West:
  1. The Hartford
  2. state farm
  3. GEICO
South East :
  1. Farm Bureau Insurance – Tennessee (for an 11e consecutive year)
  2. Automobile owners’ insurance
  3. Erie Insurance
South West :
  1. state farm
  2. The Hartford
  3. American family

For full geographic rankings, click here.

For tips from CarPro on how to shop for car insurance, click here.

About the study

JD Power’s 2022 U.S. Auto Insurance Study, now in its 23rd year, examines customer satisfaction across five factors (in alphabetical order): billing process and policy information; complaints; interaction; policy offers; and price. The study is based on responses from 36,935 auto insurance customers and was conducted from January to April 2022.

Photo credit: New Africa/

This article originally appeared on CarProUSA