We have some good and bad news when it comes to car repairs. The good news is they’re not taking so long. But on the flip side, repair costs are climbing which means auto insurance premiums are too.
According to the new J.D. Power 2024 U.S. Auto Claims Satisfaction Study, the average repair cycle time for claims filed later in the fielding period is 18.9 days, which is down 5.0 days from 23.9 days in the early fielding period. However, while that may offer some relief to insurers and their customers, the cost side is not. Researchers report that the average repair cost has increased 26% in the past two years. It follows that Premiums are up, rising 15% during the past year.
“The claims process is the moment of truth for auto insurance customers, so when they experience rate increases and then have a claim with longer-than-expected repair times and other inconveniences, their overall trust in the brand is greatly diminished,” said Mark Garrett, director of global insurance intelligence at J.D. Power. “In fact, 80% of auto insurance customers who have poor claims experiences have already left or say they plan to leave that carrier. That makes this year’s significant improvement in repair cycle times very good news for insurers and their customers. However, premium increases have created a new challenge for insurers as trust is eroding and affecting the way customers view their claims. There are still many challenges the industry needs to navigate to maintain customer loyalty.”
Here are some of the study’s key findings:
- Relief for repair cycle times: J.D. Power researchers found that the overall average repair cycle time in this year’s study is 22.3 days, down 1.0 day from the 2023 study. However, when results are broken out into the quarter in which the claim was filed, cycle times have improved steadily since peaking in early 2023, for a total 5.0-day reduction throughout fielding of the 2024 study.
- Premium increases following claims crush customer satisfaction: Nearly half of auto insurance customers had their premiums increase this past year. Researchers report that 48% of study respondents experienced a premium increase during the past 12 months. Satisfaction is particularly low among those who incurred increases prior to their claim, and these customers may have been entering the claim process already upset by rising prices. J.D. Power says its study shows that these customers were more likely to have an issue—such as communication with the insurer not being very easy or timing expectations not being managed—and thus they didn’t feel more at ease after submitting their claim. Furthermore, nearly half of those increases were attributable to claims. Compared with those customers who did not have an increase, satisfaction scores fall more than 100 points (on a 1,000-point scale) following a claim-related rate increase. J.D. Power says this negative effect is most pronounced among Boomers and Pre-Boomers, with a 178-point decrease in trust following a claim-related rate increase.
- Digital claims processing drives satisfaction but not for all customers: J.D. Power also looked at the method of filing of claims, traditionally versus new digital methods. Researchers say insurer efforts to improve mobile apps and the outcome appears to be paying off. For the past three years, claims filed via call centers or agents outperformed digital channels, but now digital is receiving higher scores with mobile apps achieving the highest scores. Being able to upload photos in the apps is also a big plus when it comes to customer satisfaction. J.D. Power’s study found that satisfaction is higher among those who stay in the app to submit photos and receive status updates (775) than for all other digital experiences. However, it’s not something a lot of people are doing, as J.D. Power reports that only 13% of customers are engaging in that process. Boomers and Pre-Boomers are still hesitant to adopt fully digital processes, with 32% stating they disagree with being comfortable using digital tools for the entire claim. Customers who were surveyed also rate digital channels lower than speaking with someone if they have a specific question. Thus, J.D. Power suggests that generational differences and the types of tasks being performed are still affecting digital experiences.
- Good communication is key to satisfying claim experience: J.D. Power says the No. 1 key performance indicator in the study is to ensure that communicating with insurer reps is very easy. Being accessible; responding in a timely fashion; reps providing consistent service; managing timing expectations; and providing options for proactive updates are all critical elements of communication throughout a claim. Researchers say this is another area in which digital tools play a key role in customers’ ability to access information and stay informed.
Insurance Company Rankings
As for which auto insurer ranks highest in overall customer satisfaction, NJM Insurance Co. tops the list with a score of 782.
- NJM Insurance Co. (782)
- Amica (746)
- Erie Insurance (733)
NJM offers insurance policies in the Mid-Atlantic region (Connecticut, Maryland, New Jersey, Ohio, and Pennsylvania.) Amica is a national insurer and Erie serves 12 states— Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, Wisconsin—and the District of Columbia.
About the Study
J.D. Power says it redesigned its U.S. Auto Claims Satisfaction Study for 2024 so scores aren’t comparable year over year with previous studies. The 2024 study is based on responses from 9,725 auto insurance customers who settled a claim within the past nine months prior to participating in the survey. The study measures customer experience across eight core dimensions (in order of importance): trust; fairness of settlement; time to settle claim; people; communication; ease of resolving claim; ease of starting claim; and digital channels. The study does not include claimants whose vehicle incurred only glass/windshield damage or was stolen, or who only filed a roadside assistance claim. The study was fielded from October 2023 through August 2024.
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