Dealers Can Win Sales By Understanding Customers’ Insurance Pain Points
Insurance rate increased stall sales, but trust can win satisfaction, brand advocacy, reports J.D. Power.
Now is the time for dealers to ensure they understand auto buyers’ auto insurance pain points if they want to close more sales.
The J.D. Power 2024 U.S. Auto Insurance Study shows that auto insurance rate increases do not always erode customer satisfaction. In fact, positive customer satisfaction and brand advocacy levels are high – even when rates are high – if the customer trusts the insurer. Yet 51% of respondents report they have little trust in their auto insurers.
“Auto insurers are in a tough position right now,” says Breanne Armstrong, director of global insurance intelligence at J.D. Power. “With repair costs still rising – and with more than 20% of vehicles involved in collisions now considered total write-offs – insurers are still losing money, despite passing along huge price increases to their customers. What’s interesting in J.D. Power data is that even though high premiums negatively affect customer satisfaction, those negative influences can be offset by high levels of trust that insurers will come through when they are needed.”
Of course, auto dealers are in a tough position, too. And though they are not insurance agents they can arm themselves to save deals by telling consumers about the average 11.2% auto insurance increase and steering them toward trustworthy resources.
Norman Dorf, president of Honda of Tenafly (NJ), is one of several retail insiders who tells WardsAuto that nearly completed deals have fallen apart in recent months due to insurance rates.
Yes, ideally consumers should shop for auto insurance before they work with a dealership. The reality, according to retail insiders, is many don’t. Dealers who arm themselves with information about rates and insurers can help consumers move toward financial goals.
Such guidance will also move dealers closer to offering the holistic sales experience an increasing number of millennials and Gen Z consumers seek, as previously reported in WardsAuto.
Where to begin? These key findings of the J.D. Power study can offer insights into consumers’ pain points regarding auto insurance:
Trust has huge influence on customer satisfaction and brand loyalty: The average overall satisfaction score among auto insurance customers with the highest level of trust in their insurer is 917 (on a 1,000-point scale), which is 426 points higher than among those who have the lowest level of trust in their insurer. Similarly, 90% of those in the high-trust category say they are likely to renew their policy with the same insurer vs. just 30% among those in the low-trust category.
Most insurers miss the mark on trust: Slightly more than half (51%) of customers fall into the low-trust category, while 15% have high levels of trust and 34% have mid-level trust.
Trust varies by region; Florida scores lowest: The lowest trust scores are in regions with the largest proportion of insurer-initiated rate increases. Florida, where the incidence of rate increases is highest, also has the highest percentage of customers (55%) with low levels of trust.
Managing expectations around rate increases is key component to building trust: The average trust score among customers who experience an insurer-initiated increase – but who fully understand the reasons for that increase and expect the increase – is 735. That is just one point lower than the average trust score among customers who experienced an insurer-initiated rate decrease (736).
See below for J.D. Power’s list of the highest-ranking auto insurers and scores by region, based on a 1,000-point scale:
California: Auto Club of Southern CA (AAA) (684)
Central: Shelter (677) (for a fourth consecutive year)
Florida: Auto-Owners Insurance (654)
Mid-Atlantic: Erie Insurance (713) (for a third consecutive year)
New England: Amica (709)
New York: Travelers (667)
North Central: Erie Insurance (710) (for a fourth consecutive year)
Northwest: PEMCO Insurance (666)
Southeast: Alfa Insurance (693)
Southwest: CSAA Insurance Group (AAA) (683)
Texas: Texas Farm Bureau (686)
Usage-Based Insurance (UBI): Nationwide (842)
For more information about the U.S. Auto Insurance Study, visit https://www.jdpower.com/business/insurance/auto-insurance-study.
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