Auto insurance policyholders at USAA are more “delighted” than other insurers’ customers and are so satisfied with the coverage provider that 4 out of 5 of them would recommend the company to friends and family, according to a survey of tens of thousands of auto insurance consumers.
Market Force Information (MFI), which produced the survey, ranked auto insurers in a “Delight Index” that the global consumer consultancy firm described as an “intersection of overall satisfaction and the likelihood of recommending” an auto insurer to others.
Amica, Erie, The Hartford, State Farm and AAA also nabbed high scores in the Delight Index. But it was USAA that outperformed competitors in the chief index while making a strong showing across the board.
The Texas-based insurer, which provides policies to members of the military and their families, has a reputation for “delivering exceptional service,” MFI said in a statement.
USAA performed well when its auto policyholders were asked about loyalty and satisfaction because they were happy with the provider’s price, stability and online services.
When charting loyalty levels, MFI asked consumers if they are “committed” to their provider:
75 percent said so about USAA.
49 percent said so about Amica.
45 percent said so about State Farm.
42 percent said so about Erie.
40 percent said so about AAA.
The rankings were nearly mirrored when those surveyed were asked which carrier they thought is “absolutely the best one available in my area”:
71 percent said so about USAA.
49 percent said so about Amica.
39 percent said so about Erie.
38 percent said so about State Farm.
36 percent said so about AAA.
USAA also topped other carriers by a mile in rankings from a J.D. Power and Associates survey on car insurance consumers’ shopping habits that was released in April.
The MFI report was generated from an August survey of more than 21,000 auto insurance consumers in North America.
Price Is Most Common Reason for Picking an Auto Insurer
Most consumers (59 percent) cited price as a reason for choosing their primary auto insurer, according to the survey.
Esurance and GEICO were the insurers that consumers most often cited as leaders in price.
However, the survey also showed that insurers have some price flexibility if their customers are committed to them.
Fifty-three percent of USAA policyholders, who the survey found were by and large the most loyal and satisfied, also said that they “would not consider switching” from the coverage provider if it “raised my service fees a small amount.”
Results for other insurers on that question:
State Farm: 28 percent
Amica Mutual: 27 percent
Erie: 26 percent
Auto-Owners: 24 percent
Bundling Availability and Financial Stability Draws in Customers
Insurers can bank on other, less-obvious attributes to reel in customers, according to MFI.
Nearly 3 out of every 10 of those surveyed said that they are drawn to insurers that offer bundled coverage with “complete service” on those policies; availability of consolidated coverage was the second-most-cited feature that consumers said was their reason to choose an auto insurer.
“Consumers prefer providers to have multiple types of insurance so they can deal with only one provider,” Janet Eden-Harris, MFI’s chief marketing officer, told Online Auto Insurance News (OAIN).
A carrier’s financial standing also figures into whether or not a consumer buys vehicle coverage, with nearly one-fourth of those surveyed saying that they chose their car insurer in part because it was a “stable, financially secure institution.”
USAA led in that category, with half of its customers citing the insurer’s financial stability as the reason they bought coverage there, followed by State Farm and AAA at 36 percent and 33 percent, respectively.
About 1 out of 10 Consumers Switched Insurers in Past Year
When asking consumers which insurer “they use for their auto insurance needs,” the ranking looked much like the one from the National Association of Insurance Commissioners, which reports on current market share among personal car coverage carriers in the U.S.:
State Farm: 18 percent
GEICO: 13 percent
Allstate: 8 percent
Progressive: 8 percent
USAA: 6 percent
Although price is the most-common driver in consumer choice, MFI found that there are many ways insurers can sway consumers — and it’s a large pool of consumers.
Only 14 percent of those surveyed said they will definitely not be switching carriers in the next year, leaving a lot for insurers to fight over. Nearly 4 out of every 5 of those surveyed said they were undecided on switching insurers in the next year and nearly 1 out of every 10 said they will “definitely [be] switching.”
Market Force also found that, while a little more than half of those surveyed said they were “delighted” with their car insurer, a sizable 48 percent of consumers were either “dissatisfied” or “just OK.”
Twenty-five percent of respondents said that they “considered switching” from auto insurer in the past year, with 12 percent of them actually doing so.
MFI’s survey delved further into customer retention, finding that the highly-satisfied customer base at USAA was also the least likely to consider switching to another company, at 10 percent saying so. Other insurers didn’t do as well:
52 percent of Esurance customers said they considered switching
37 percent of Farmers customers said the same
37 percent of Nationwide customers also said so
35 percent of Progressive customers said so
“[Consumers] value good pricing, but want it coupled with great service such as getting good advice on the coverage requirements they need, and feeling that the insurance provider understands their needs,” Eden-Harris said.
The MFI found that 62 percent of claimants who filed with an insurer in the last year said they were “very happy with the service,” which Eden-Harris said also means that “almost 4 in 10 were not.”
Nearly a quarter of claimants gave service a rating of 4 out of 5, according to Eden-Harris, though 12 percent rated their claims experience at 3 or less.
Those unhappy claimants “are definitely at high risk for defecting,” Eden-Harris told OAIN.
“Interestingly, that’s exactly the percentage of respondents that said they did switch providers in the last year,” she said.
Recommendations Also Count in Choice
According to the survey, recommendations from a friend or relative played into their decision 24 percent of the time.
It also found that its respondents who were “delighted” with their provider were more than five times as likely to recommend it compared to those who were “merely satisfied.”
Satisfaction and likelihood of recommendation are “highly correlated” and give insurers more reason to keep their customers happy, according to Eden-Harris.
“Delighting your existing customers has the nice add-on effect of producing recommendations,” she told OAIN.
USAA outpaced other insurers in several recommendation-related categories.
Nearly 4 out of every 5 of USAA policyholders surveyed said they would “happily recommend” the carrier to a friend or colleague, the highest percentage of any insurer.
Results for other insurers:
Amica Mutual: 65 percent
Erie:54 percent
State Farm: 50 percent
AAA: 49 percent
USAA also led the pack among insurers that were most recommended, with 43 percent of policyholders saying they ended up with the company on recommendations from friends and family; Erie followed with 40 percent and Amica at 38 percent.
Hyper-Connected Means Hyper-Competitive
The heavy role that recommendations play in where policyholders decide to buy an auto insurance policy shows just how hyper-connected the world of business is, according to Eden-Harris.
“I think this is a consumer trend that we find in many industries,” she said. “Consumers are more informed than ever.”
Eden-Harris described the common process of today’s consumers, who can get quotes for auto insurance at competitive prices, see how consumers view a particular carrier and obtain industry reports.
All this can be done “without leaving their desks.”
“As a result, they are holding insurance providers to ever-higher standards,” Eden-Harris told OAIN.
Customers are pushed to leaving their insurer for a number of reasons, led by price:
25 percent of respondents switched because their insurer “implemented new fees/rules.”
22 percent switched because they weren’t “happy with the service.”
13 percent switched because they received a recommendation about another insurer.
9 percent switched because they wanted to “consolidate services with fewer” providers.”
5 percent switched because they “saw some intriguing advertising.”
2 percent switched because they “didn’t trust the financial stability” of their insurer
Other Considerations Include Advertising, Online Service
Other variables like advertising and online services frame the competitive world that car insurers inhabit.
The billions spent throughout the industry on advertising can mean more public exposure for an insurer, but it also means that an insurer can lose customers to another big spender.
MFI found that GEICO was saw the highest loss rate among respondents, at 12 percent.
GEICO outspent all other auto insurers in a report released this year on marketing expenditures.
But Progressive, Allstate and State Farm weren’t far behind in their advertising expenditures, and that was reflected in what MFI found about customer retention:
Progressive, Allstate and State Farm all tied for the second-highest loss rates, at 11 percent each.
“Those are all heavy advertisers,” Eden-Harris said.
The MFI found that online service is another way an insurer can impress consumers who might not be happy with other aspects of that insurer’s business. Nearly 1 out of every 5 respondents cited easy online service as an important factor when picking their car insurer, according to the Eden-Harris.
And although the survey found that a chunk of Esurance customers considered taking business elsewhere in the last year, the direct-to-consumer insurer outperformed others in “easy online services to manage profile and account,” followed by GEICO and USAA.
To find out how policyholders rank USAA on claims, rates and service, readers can research user-submitted USAA auto insurance reviews online.