[SPEAKER_01]: Welcome to AMBASTARDIO. [SPEAKER_01]: The twenty twenty five U.S. [SPEAKER_01]: auto insurance study from JD power reveals shifting dynamics in the insurance industry. [SPEAKER_01]: As carriers turn their focus toward retaining high value customers amid persistent as fat as action and elevated switching rates. [SPEAKER_01]: I'm John Weber for I am best audio and I'm speaking today with Stephen Crudes and managing director and insurance business intelligence for JD power.
[SPEAKER_01]: Steven so glad you could join us today. [SPEAKER_01]: Yeah John happy to be here. [SPEAKER_01]: So Steve, the study shows that many high value customers are at risk of leaving their carriers. [SPEAKER_01]: What are insurers getting wrong when it comes to retaining these valuable policy holders?
[SPEAKER_00]: Yeah, it turns out that about fifteen percent of all auto insurance customers here in the US are what we classify as high value customers, meaning they're more likely to bundle multiple policies, more likely to be obtained over all by their insurer. [SPEAKER_00]: And just overall, present less risk to their insurer.
[SPEAKER_00]: What insurers are doing wrong as of late is we've seen that across the key drivers of auto insurance satisfaction insurers are not performing any better with that high CLV or customer lifetime value type of customer than they are with other customers. [SPEAKER_00]: In other words, they haven't differentiated the experience.
[SPEAKER_00]: A customer who is really high value to their insurer is getting about the same experience from their insurer as a customer is definitely a much less value to their insurer. [SPEAKER_00]: So a recommendation that we're making is for insurer to use data and analytics to better understand who their high value customers are. [SPEAKER_00]: And to the extent possible provide a white glove or a better level of service to that customer that they really ultimately want to retain.
[SPEAKER_01]: Now I really don't need to tell you Steven, Price may track new customers, but service keeps them. [SPEAKER_01]: So what specific aspects of service are proving most critical in today's market? [SPEAKER_00]: Yeah, there's a couple I would point to. [SPEAKER_00]: One is brand new to the study this year. [SPEAKER_00]: This is the first year that in the twenty six year history of this study that we have a new key performance indicator that's the largest driver of satisfaction.
[SPEAKER_00]: And that is having seamless interactions across channels. [SPEAKER_00]: So when a customer has to interact across multiple communication channels with their insurer, [SPEAKER_00]: Maybe they started an interaction with the mobile app and they can't get the answer so they need to contact the call center and they still didn't get the answer so they ultimately reach out to their agent. [SPEAKER_00]: In that case they used three different channels.
[SPEAKER_00]: To the extent those interactions are seamless across channels, that's the most important driver right now of customer satisfaction. [SPEAKER_00]: Followed by what was historically the most important driver which is [SPEAKER_00]: the extent to which the auto insurance customer understands their policy and what it covers.
[SPEAKER_00]: So many customers admit that they don't really fully understand their policy and what it covers and that they think they're insurer or if they have an agent that their agent could do a better job. [SPEAKER_00]: of explaining that policy to them and what it does cover.
[SPEAKER_00]: Unfortunately, sometimes they find out the hard way they have a claim and they thought they had coverage for something that they ultimately don't or they don't really understand how the coverage applies and that's not when you want your customer to find out that the their coverage is weren't what they thought they were. [SPEAKER_01]: You just mentioned seamless cross-channel interaction and that was cited as a major driver of customer experience.
[SPEAKER_01]: We're urge and tours falling short and what best practices are emerging there. [SPEAKER_00]: Yeah, I think it's tough for insurers to say really what they're falling short as much as what they can do to really improve. [SPEAKER_00]: And that is to the extent their customers have a history of interaction with them across channels. [SPEAKER_00]: So if think about introducing them to your mobile app, making sure they're downloading and utilizing the mobile app.
[SPEAKER_00]: In fact, [SPEAKER_00]: For most of the simple transactions that an auto insurance customer has with their insurance company, they prefer to have those interactions through a mobile app. [SPEAKER_00]: So make sure that the customer knows you have that capability that they know about how they can track on your website.
[SPEAKER_00]: Because when a customer has had a history of interacting with you through multiple channels up to five or more channels that think about, they've talked with their agent, they've called the contact center, they've used a website, used a mobile app, interact with you through many different ways. [SPEAKER_00]: That's the type of customer that can more easily navigate. [SPEAKER_00]: a cross channel experience.
[SPEAKER_00]: So they, they're the people who tell us in the survey, they're the, they're the most satisfied that their insurer is providing a seamless cross channel experience just by virtue of having more experience interacting with their insurer through multiple channels. [SPEAKER_01]: How do customer satisfaction levels vary across the eleven geographic regions you've studied Steven and what can ensures learn from the highest performing areas?
[SPEAKER_00]: Yeah, it's interesting that there is quite a bit of difference in satisfaction across the different regions. [SPEAKER_00]: There are regions where the average in the region might be close to winning an award in a different region. [SPEAKER_00]: Overall, in the southeast portion of the US, we see the highest satisfaction scores. [SPEAKER_00]: And part of that is what the insurers are doing.
[SPEAKER_00]: I think part of that too is just the different expectations the customers have in different parts of the country, the different other insurance experiences they have. [SPEAKER_00]: We know that satisfaction is always the where experience and expectation meet. [SPEAKER_00]: So that being said, I think there are some insurers around the country. [SPEAKER_00]: We really look at the [SPEAKER_00]: In many cases, the smaller regional insurers.
[SPEAKER_00]: So, in the word winner this year in California was Yolomobile Club of Southern California. [SPEAKER_00]: They don't only write in Southern California, they write in other states as well, but they're not a national insurer. [SPEAKER_00]: They have a defined geographic footprint. [SPEAKER_00]: And they score very well in the California region. [SPEAKER_00]: Other insurers like New York Central Mutual wins in the New York region.
[SPEAKER_00]: They really write in the state of New York. [SPEAKER_00]: Then you have traditionally in other years, a lot of single state insurers or insurers are right in two or three states. [SPEAKER_00]: They really get to know their local market well, and that helps them really exceed the expectations of customers and do well in a study like this.
[SPEAKER_01]: So finally, Stephen, what insights did the study under uncover about usage based insurance and how is it helping customer expectations and satisfaction? [SPEAKER_00]: Yeah, usage based insurance the last two years has become a really critical topic in the industry. [SPEAKER_00]: Customers when they go out and shop for auto insurance are looking more and more to find the usage based insurance policy. [SPEAKER_00]: They want to find that UBI policy.
[SPEAKER_00]: And in fact, what the data shows is that when shopping and when they are considering different insurers [SPEAKER_00]: They may make a decision to bundle with you, both auto and home policies, simply because you offered them UBI.
[SPEAKER_00]: And in some cases, you may win the auto policy, but not win the home policy, because the customer decided that they can save more by not bundling, that they can actually save more by having auto with you, maybe placing the home policy somewhere else.
[SPEAKER_00]: So in other words, we're seeing UBI effects both the bundling, [SPEAKER_00]: and the unbundling decision, but increasingly year over year, consumers are telling us it's more important in their shopping journey, and also in their retention with their current owner, to have a UBI-based policy. [SPEAKER_01]: Steve, and thank you so much for taking the time to speak with us today. [SPEAKER_01]: Thank you.
[SPEAKER_01]: I was Stephen Crudson, managing director and insurance business intelligence for JD Power, and I'm John Weber for AM best audio. [SPEAKER_01]: looking to get the full attention of the insurance industry. [SPEAKER_01]: We have the platforms that will do just that. [SPEAKER_01]: Whether it be AM best TV, AM best audio, best review magazine, or best day.
[SPEAKER_01]: Find out more by calling AM best advertising sales at nine o'clock, four three nine two two hundred extension five three nine nine and have a great day.