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J.D. Power and Associates Reports: Quality of Service Drives Auto Insurance
Policy Renewal Rates

Copyright: PR Newswire
Source: PR Newswire
Wordcount: 1033

WESTLAKE VILLAGE, Calif., Aug. 30 /PRNewswire/ -- Policy retention is
critical to the financial success of auto insurance carriers, and a
customer's experience with their provider is the most important
element-outweighing brand image-in generating policy renewals, according to
the J.D. Power and Associates 2007 National Auto Insurance Study(SM)
released today.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050527/LAF028LOGO-a)

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

For an eighth consecutive year, Amica Mutual ranks highest in customer
satisfaction, followed by Erie, GEICO and State Farm, respectively. American
Family and Auto-Owners rank fifth in a tie. USAA, a financial services
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 finds that satisfaction with the overall insurance experience
accounts for 45 percent of the customer commitment model, which specifically
measures a customer's propensity to remain loyal to their insurer. Among
customers who indicate high levels of satisfaction with their carrier
overall, 88 percent said they "definitely would" renew their policy with
their auto insurance provider. Conversely, only 16 percent of customers who
report low levels of satisfaction said they would definitely renew their
policy.

"Our customer commitment model examines the degree to which brand image,
inherent costs associated with switching insurers, overall experience, and
propensity to be loyal drive customer commitment and, consequently, loyalty
to insurers. It reveals that the overall service experience matters most to
policyholders among all other elements within the model," said Jeremy
Bowler, senior director of the insurance practice at J.D. Power and
Associates. "Maximizing renewal rates is key to the success of every
carrier, as just a 1 percent shift in market share can represent $1.6
billion in annual premiums. Examples of auto insurance business practices
that drive higher customer satisfaction include offering annual policy
reviews, loyalty discounts, proactively providing customers with helpful
information pertaining to their policy, and enhancing the Web service
experience."

The study finds that 33 percent of customers say they use the Internet to
interact with their auto insurance carrier. While only 5 percent of
customers report that they are unable to access their auto insurance
information online, overall satisfaction among this group of customers is
considerably lower compared with customers who say they are able to access
their information online.

"Even though customer satisfaction ratings for Web interactions tend to be
lower than those for agency or call center experiences, the gap is closing,"
said Bowler. "Satisfaction is highest among the 77 percent of customers who
were able to complete an entire service transaction online, such as making a
bill payment. Some carriers have made substantial enhancements to their Web
site functionality in recent years, which can generate benefits such as a
reduction in servicing costs and, ultimately, higher customer satisfaction.
For these reasons, it is important for insurance companies to provide online
policy access, a user-friendly Web site and to effectively convey the
availability of these services to their customers."

The study also finds the following key auto insurance patterns: -- The
typical auto insurance policy holder has been with their carrier for more
than ten years. -- Those customers who have reviewed their insurance needs
with their insurer in the previous 12 months tend to be considerably more
satisfied. However, one in three policy holders say they have not reviewed
their policies since first selecting their current insurer; this group of
consumers is particularly less satisfied, on average. -- Nine out of ten
customers say they receive some kind of discount on their premium, yet those
receiving dividends, accident or ticket forgiveness or credit for belonging
to a professional organization tend to be the most satisfied with their
insurer.

The 2007 National Auto Insurance Study is based on responses from 16,012
auto insurance policyholders who were surveyed in March and April 2007. To
view the management discussion based on this year's study findings, please
click the following link:
http://www.jdpower.com//corporate/library/download/?files=9945348

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

Customer Satisfaction Index Ranking (Based on a 1,000-point scale) Amica
Mutual 837 Erie 803 GEICO 799 State Farm 792 American Family 788 Auto-Owners
788 Automobile Club of Southern California 785 Allstate 783 American
National Property and Casualty 783 MetLife 783 COUNTRY 781 Industry Average
781 The Hartford 778 Progressive 770 Automobile Club Group 768 Nationwide
768 California State Automobile Association 764 Encompass 763 Farmers 762
Liberty Mutual 761 Safeco 760 21st Century 759 Travelers 750 GMAC 747 AIG
732 Mercury 727 USAA* 886

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

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an
ISO 9001-registered global marketing information services firm operating in
key business sectors including market research, forecasting, performance
improvement, training and customer satisfaction. The firm's quality and
satisfaction measurements are based on responses from millions of consumers
annually. For more information on car insurance, car reviews and ratings,
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 2006 were $6.3 billion. Additional information is
available at http://www.mcgraw-hill.com.

Media Relations Contacts: Elaine Pacheco John Tews Cohn & Wolfe J.D. Power
and Associates 8730 W Sunset Blvd., 5th Floor 5435 Corporate Drive, Suite
300 Los Angeles, Calif. 90069 Troy, Mich. 48098 (310) 967-2961 (248)
312-4119 elaine_pacheco@cohnwolfe.com john.tews@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