J.D. Power and Associates Reports: Producing Highly Satisfied Customers Can Improve the Bottom Line for Auto Insurers Through Increased Renewal Rates

WESTLAKE VILLAGE, Calif., Aug. 28 /PRNewswire/ -- Auto insurance customers with high commitment levels not only make more recommendations and are more likely to renew their policies, but are also significantly less sensitive to pricing offers from competitors, according to the J.D. Power and Associates 2008 National Auto Insurance Study(SM) released today. Auto insurers with highly satisfied customers have a renewal rate that is 9 percentage points higher, on average, than insurers whose customers report low levels of satisfaction.

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The study measures customer satisfaction with auto insurance companies across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims.

The study finds that 59 percent of customers with high commitment report they would not switch their auto insurer for any price, compared with only 9 percent of low-commitment customers who say the same. Policy renewals are also much more likely among customers with high commitment levels, as 90 percent report they "definitely will" renew their auto insurance policy, compared with only 14 percent of low-commitment customers who indicate that they "definitely will" renew.

Customers with low commitment levels are also much less likely to provide recommendations to friends and family (9%) compared with highly committed customers (81%). Additionally, the average number of recommendations made by customers with low commitment (1.4) is notably lower than the number of recommendations made by high-commitment customers (7.7).

"Increasing their numbers of highly committed customers by delivering positive service experiences can be very rewarding to auto insurers and significantly impact their financial returns," said Jeff Leiman, senior director of the insurance practice at J.D. Power and Associates. "In an industry where a one-percent shift in total market share can amount to a $1.6 billion dollar shift in premiums, enhancing the customer experience to gain highly committed customers is absolutely critical to auto insurers."

Overall satisfaction across the auto insurance industry has increased -- up from 781 points on a 1,000-point scale in 2007 to 787 in 2008. Additionally, satisfaction has increased steadily during the past five years, improving by 25 points since 2004. In 2008, eight of the 27 profiled insurance carriers demonstrate significant year-over-year-improvements in customer satisfaction.

Intense competition in the marketplace and the consistent improvement by carriers over time signal that insurance companies recognize that merely satisfying customers is not enough to remain competitive," said Leiman. "The very nature of the auto insurance market requires continuous improvements in order to keep pace with ever-increasing customer expectations."

Amica Mutual ranks highest in customer satisfaction with auto insurance companies for a ninth consecutive year, followed by State Farm, Erie Insurance, Auto-Owners, American National Property and Casualty (ANPAC), and the Automobile Club ofSouthern California respectively. USAA, an insurance provider open only to U.S. military personnel and their families, and therefore not included in the rankings, also achieves a high level of customer satisfaction.

The study also finds that while all factors of the auto insurance experience are important, insurers can make the greatest impact on satisfaction by focusing on and increasing customer interactions.

"Proactive, outbound communications greatly improve the customer experience, as the more engaged auto insurers are, the more satisfied customers become," said Leiman. "Implementing various key practices -- such as resolving issues on the first contact, offering annual policy reviews, providing online access to policy information and increasing customer awareness of policy discounts -- can also greatly impact satisfaction and enhance the overall experience."

The 2008 National Auto Insurance Study is based on 21,236 responses from auto insurance policyholders who were surveyed in April and May 2008. To view the management discussion based on this year's study findings, please visit the following link:

http://www.jdpower.com/corporate/library/download/?files=9998915

For more information on auto insurance provider ratings, please visit JDPower.com

    Customer Satisfaction Index Ranking
    (Based on a 1,000-point scale)

    Auto Insurance Provider   Overall Satisfaction Score   Power Circle Rating
    Amica Mutual                       827                           5
    State Farm                         814                           4
    Erie Insurance                     806                           4
    Auto-Owners                        803                           4
    American National Property and
     Casualty                          799                           4
    Automobile Club of Southern
     California                        796                           4
    Allstate                           792                           3
    American Family                    792                           3
    Automobile Club Group              788                           3
    Industry Average                   787                           3
    COUNTRY                            786                           3
    The Hartford                       784                           3
    GEICO                              783                           3
    Progressive                        782                           3
    California State Automobile
     Association                       779                           3
    Farmers                            777                           3
    Nationwide                         775                           3
    Encompass                          772                           3
    Liberty Mutual                     771                           3
    Travelers                          765                           2
    MetLife                            762                           2
    Safeco                             762                           2
    GMAC                               760                           2
    21st Century                       755                           2
    Hanover                            747                           2
    Mercury                            744                           2
    AIG                                743                           2

    *USAA                              887                           5

*USAA is an insurance provider open only to U.S. military personnel and their families and therefore is not included in the rankings.

NOTE: 21st Century, which was acquired by AIG in late 2007, is included in the 2008 rankings as customers still identified with the 21st Century brand at the time the study was fielded.

About J.D. Power and Associates

Headquartered inWestlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2007 were $6.8 billion. Additional information is available at http://www.mcgraw-hill.com.

     Media Relations Contacts:
     Jeff Perlman                     Syvetril Perryman
     Brandware Public Relations       J.D. Power and Associates
     Los Angeles, Calif.              Westlake Village, Calif.
     (818) 317-3070                   (805) 418-8103
     jperlman@brandwaregroup.com      syvetril.perryman@jdpa.com

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. http://www.jdpower.com/corporate

SOURCE J.D. Power and Associates

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