The auto insurance industry returned more than $18 billion in auto insurance premiums to customers in 2020 due to the decline in the number of miles driven during the coronavirus pandemic. However, overall customer satisfaction with auto insurers is flat, even after four consecutive years of improving results, according to a J.D. Power 2021 U.S. Auto Insurance Study.^SM

The study measures customer satisfaction with auto insurers in 11 geographic regions and examines customer satisfaction in five areas: Billing process and policy information; claims; interaction; policy offerings; and price.

Overall customer satisfaction with auto insurance providers is 835 on a 1,000-point scale this year, unchanged from 2020. This is the first time since 2017 that auto insurance customer satisfaction has not improved.

The main reason why customer satisfaction has stalled: Companies are missing the mark on effective communication with customers.

“The refunds provided to customers during the pandemic were significant, representing nearly 7% of total industry premiums, but only half of customers were even aware of them," said Robert Lajdziak, senior consultant for insurance intelligence at J.D. Power. “Worse, when customers needed to communicate with their insurers, either via phone, website or chat, many came away feeling less satisfied with the result than in the past."

With only 52% of auto insurance customers aware of their insurer's COVID-19 premium relief efforts, brand impressions are significantly higher among customers who were aware of the relief efforts—which was reflected in their intent to renew their policy.

While price satisfaction has seen the greatest improvement year over year, it is overshadowed by significant declines in satisfaction with auto insurer interaction, reflecting a more digitally demanding consumer.

Satisfaction with the assisted online channel, which is comprised of chat and email functions, declined 12 points from a year ago, with decreases also seen in contact center (-5), website (-3) and local agent (-1).

And nearly half (45%) of auto insurance customers say they would switch carriers if they could receive a savings of $200 or less. Of those who recently switched due to a premium increase, 57% did so for increases of $200 or less.

The pandemic has also catalyzed telematics growth and receptivity among customers. More than one-third of auto insurance customers said they are willing to try usage-based insurance (UBI), which uses telematics technology to track customer driving patterns and includes discounts based on safe driving and fewer miles driven. Currently, 16% of customers say they are already using the technology, which is double the volume seen five years ago and is the largest year-over-year increase to date.

The study is based on responses from 38,938 auto insurance customers that were fielded in February and March 2021.

Olivia Overman is IA content editor.