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Study: Motorists Often Switch Insurers After Filing a Claim

Amica Mutual, Erie Insurance, State Farm Get Top Ratings

January 14, 2007
Nearly one out of every five customers considers switching car insurance companies after experiencing the collision claim process, according to a J.D. Power and Associates study. Amica Mutual, Erie Insurance and State Farm had the highest satisfaction ratings.

The study examines three factors that drive customer satisfaction with the repair experience. In order of importance, they are: claims/estimation (62%); body shop (36%); and rental car (2%).

"Filing an insurance claim is a critical moment of truth that shapes a customer's overall perception of their insurer," said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. "Often, this is the first time they truly become familiar with their insurance policy.

"Misconceptions about what is covered by the auto policy, or what to expect during the claim and repair processes can lead to significantly lower customer satisfaction, which in turn increases the likelihood that the customer may consider switching carriers in the future," Bowler said.

The study finds that 7 percent of customers chose not to file a claim with their insurer after their most recent collision. Common reasons include: the insurance deductible was more than the cost of the repairs; concern that the carrier would increase the premium after the claim; or at the advice of their insurance agent.

"Before filing an insurance claim for minor damage, customers may want to first get an estimate for the cost of repairs," said Bowler. "If it's less than the deductible on the policy, the insurer will likely not cover any of the expense anyway."

Additionally, while more than 30 percent of auto insurance customers who chose not to file a claim after a collision feared their premium would increase, 62 percent of respondents who did file a claim more than six months prior to being surveyed indicate their premium has not been re-adjusted by their insurer.

With a score of 821 index points on a 1,000-point scale, Amica Mutual ranks highest in satisfying claimants with the collision repair process, receiving the highest ratings from customers in the claims/estimation factor.

Erie Insurance and State Farm, respectively, follow Amica Mutual in the overall ranking. USAA, an insurance provider open only to the U.S. military community and their families and therefore not included in the rankings, also achieves a high level of customer satisfaction.

The study also finds that claimants whose vehicles are totaled rather than repaired are significantly more satisfied if their insurer gives them a clear explanation of why the vehicle is totaled and how they calculated the settlement amount.

Nearly 85 percent of total loss claimants receive an explanation of why their vehicle is being totaled and how their actual cash value settlement is derived.

"The difference in satisfaction is primarily driven by how well the insurer manages the claims process, which is significantly longer for claimants experiencing a total loss," said Bowler. "However, when the damage exceeds $5,000, total loss claimants tend to be significantly more satisfied with their collision experience, perhaps due to concerns surrounding repair quality and diminished value of the vehicle."

The 2006 Collision Repair Satisfaction Study is based on responses from 5,752 customers who have had collision damage repaired on their vehicle or have had a total loss within the past 12 months.

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