One in 10 Canadian customers switches auto insurance carriers, reports J.D. Power

Belairdirect, Co-operators and The Personal each rank highest in customer satisfaction in their respective region

Toronto, ON (May 7, 2014) – One in five auto insurance customers in Canada have shopped for a new insurer in the past 12 months and 9% have switched, according to the newly released J.D. Power 2014 Canadian Auto Insurance Satisfaction StudySM.

Ultimately, each insurance company conquests less than an average of 1 percent of customers shopping for a new insurance policy. Brand awareness limits most carriers’ ability to attract shoppers, as they typically limit their search to an average of only 1.5 quotes.

“Even the largest national insurance companies have limited awareness,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power. “Some of the big carriers may be well-known in one city or province, but have little or no awareness outside of that market. To grow their business, they need to build brand awareness, which traditionally requires significant advertising investment.”

Once an insurer wins a new customer, every touch point they have with that customer is crucial and can be the difference between a loyal customer and a defector. Study findings show that the three most critical touch points are the annual or semi-annual renewal notice; when a customer contacts their insurer for non-claims-related reasons (62% of customers have contacted their insurer either directly or through an agent in the past 12 months regarding a non-claim-related issue); and when a customer files a claim (12% of customers filed an auto claim in the past year).

Key Findings

  • Price, historically a key differentiator among insurance companies, is having less impact on overall customer satisfaction. Price satisfaction is highest in Quebec, primarily because the government insures against injuries to people, thus bodily injury coverage is not required for vehicle owners, keeping premiums lower than in other provinces. In Ontario, auto insurance is regulated by the Financial Services Commission of Ontario, which in 2013 implemented its Auto Insurance Cost and Rate Reduction Strategy, contributing to an increase in price satisfaction of 6 points (on a 1,000-point scale).
  • The average growth rate among all insurers included in the study is 4 percent. The largest growth rate is 24 percent, while the largest attrition rate is 11 percent.
  • Across the three provinces in the study, overall customer satisfaction drops to 758 in 2014 from 766 in 2013. Declines in satisfaction with claims (-29 points), interaction (-13) and billing and payment (-12) account for the majority of the year-over-year drop. Price is the only factor in which satisfaction improves.

The study, now in its seventh year, measures insurance customer experiences with their primary auto insurer in Canada. Customer satisfaction is measured across five factors (in order of importance): interaction; price; policy offerings; billing and payment; and claims. Insurers are ranked in three provinces: Ontario, Alberta and Quebec.

Regional Rankings

Customer satisfaction in Alberta averages 744, down 3 points from from 2013. Co-operators ranks highest in customer satisfaction in Alberta with a score of 782. Alberta Motor Association ranks second (770), followed by Johnson Insurance (754).

Customer satisfaction in Ontario averages 749, down 7 points from 2013. Belairdirect (784) ranks highest in Ontario, followed by CAA Insurance Company (778) and State Farm (773).

Customer satisfaction in Quebec improves 2 points in 2014 to 804. In Quebec, The Personal ranks highest for a second consecutive year, with a score of 837. La Capitale ranks second (821) and Desjardins General Insurance (805) third.

The 2014 Canadian Auto Insurance Satisfaction Study is based on responses from nearly 9,910 auto insurance policyholders. The study was fielded in January and February 2014.

About J.D. Power

Since 1968, organizations around the world have relied on J.D. Power as a trusted advisor for deep expertise in the industries we serve, advanced research science to drive insights, and a proven success record for driving results.

By analyzing the many aspects of the customer experience, J.D. Power can identify the multiple drivers of that experience, measure and understand the impact of those drivers, and help drive business results by monitoring and improving performance.

SOURCE: J.D. Power