According to J.D. Power’s 2023 U.S. Auto Insurance Study in Insurance Journal, about one third of auto insurance customers in the U.S. reported a rate increase in the past year, leading to a growing number moving to usage-based insurance (UBI).

Auto insurance customer satisfaction dropped 12 points to 822, driven by lower satisfaction with insurance prices, a factor that declined 25 points this year. In 2022, auto insurers suffered the worst premium loss in 20 years, leading to increased rates and customer dissatisfaction. The industry raised rates an average of 15.5% as insurers fight record high loss ratios.

“Overall customer satisfaction with auto insurers has plummeted this year, as insurers and drivers come face to face with the realities of the economy,” said Mark Garrett, director of insurance intelligence at J.D. Power. “While insurers are caught between a rock and a hard place when it comes to balancing profitability with customer experience, there are several ways they can blunt the negative effects of rising costs, such as proactively offering customers UBI alternatives, clearly signaling and explaining necessary rate increases and consistently delivering on brand promises to instill trust.”

In 2022, auto insurers lost an average of 12 cents on every dollar of premium collected, the worst performance in over 20 years. Nearly half of customers who received a mail bill and paid in full via credit card noticed a price increase, compared to 28% who received a digital bill and made automatic recurring installment payments. Negative reactions included those renting or not bundling, single car/single driver households, open to switching insurers, or having a lower perception of their insurer’s trustworthiness. Notifying customers in advance, explaining the reasons behind price increases, and offering alternatives like UBI helped maintain customer satisfaction.

Participation in usage-based insurance programs more than doubled since 2016, the report found, with 17% of auto insurance customers participating in such programs.

Among new customers, UBI participation rates is high at 26%.

Price satisfaction among customers participating in UBI programs is 59 points higher on average than non-participants.


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