Remember all the talk that digital transformation would disrupt the auto insurance industry? Well, it’s real, according to the consultants at J.D. Power.

The firm says its 2020 U.S. Auto Insurance Study proves that insurance company websites—for the first time in the study’s 21-year history—officially surpass agents in terms of importance to client interaction and service by providing higher customer satisfaction.

However, the race is still very close.

According to the survey, customer experience with auto insurer websites contributes more to satisfaction than agents, accounting for 34 percent of an insurer’s total interaction score. That’s one percentage point higher than in the agent channel, which accounts for 33 percent of total interaction satisfaction.

“We’ve seen this trend developing for several years, but this is the first time that the digital channel has become the preferred means of interacting with auto insurers, exceeding one-on-one communication with agents,” said Robert Lajdziak, senior consultant for insurance intelligence at J.D. Power.

Lajdziak believes there is a clear message in the results, as close as they are.

“This has huge implications for the industry because it puts the focus squarely on digital investment to notably expand creating seamless customer touch points. It’s an area in which the major national carriers excel, versus hyper-local, albeit knowledgeable, agent networks,” he said.

Overall customer satisfaction with auto insurers improved in 2020 to a record high of 835 (on a 1,000-point scale). National carriers such as GEICO, State Farm and Allstate have earned some of the most significant gains, together ranking highest in six of the 11 regions in the study, aided by the growth of their digital channels.

It’s not all good news for insurers. They have some work to do building trust with customers. According to J.D. Power, there is a strong correlation between scores for trust and those for overall satisfaction. On average, a one-point increase in trust (on a 5-point scale) would correlate with a 118-point increase in overall satisfaction. Despite the importance of trust, only 42 percent of all auto insurance customers say they “strongly agree” that they trust their insurer.

J.D. Power analysts contend that by “fulfilling service expectations and putting customers’ interests first, among other customer-centric initiatives, insurers can succeed in this critical-to-retention metric.”

The study affirms that customer loyalty is heavily influenced by claim history. Customers are least likely to renew their policies when part of an insurance claim is denied. Conversely, when customers have experienced a claim that was fully approved and settled, satisfaction is significantly higher and generates the greatest likelihood of renewal.

“What’s more, those customers who experienced sub-optimal claim outcomes and remained with their carrier were more diligent about understanding their policy and what it covers going forward,” the report says.

The study is based on responses from 40,123 auto insurance customers and was fielded in February-March 2020.

Source: JD Power