Insurance buyers like bundling
Sep 27, 2012
The following article was published in the Des Moines Register on September 27, 2012:
By Victor Epstein
Despite charging higher rates, insurers are generating record customer satisfaction results by bundling products for time-pressed consumers, according to a survey released Thursday by J.D. Power and Associates.
Overall satisfaction with insurers reached a record average of 785 in 2012 on the J.D. Power scale, which tops out at 1,000. That compares with an average of 766 over the past five years and 769 in 2011.
The surge was driven by higher customer satisfaction among consumers bundling their auto and home insurance policies with the same provider in 2012, which rose 19 points to an average of 806.
“Insurers are doing a better job in offering the right coverage options at competitive prices when policies are bundled,” Jeremy Bowler, senior director of J.D. Power’s insurance practice, said in a statement. “It allows customers to interact with a single insurer, potentially streamlining both billing and payment.”
Homeowner insurers have increased rates after suffering losses from tornadoes and other storms in recent years. Last year, many Iowans saw double-digit increases, with a few paying premiums more than 20 percent higher when it’s time to renew their policies.
State Farm, which is Iowa’s leading provider of homeowner and auto insurance by premiums, finished seventh in the industry in overall customer satisfaction in the 2012 J.D. Power survey. It ranked 10th among bundlers.
Nationwide Mutual Insurance Co., which ranked eighth, finished highest among insurers with a significant Des Moines presence. The Columbus, Ohio-based company, which is owned by its policyholders, had an individual customer satisfaction score of 803.
Nationwide’s operations in the Des Moines area include Allied Insurance and employ about 4,500 people.
“When we look at the results and we see the improvement, we think it’s because we’re a mutual, which allows us to put our members first,” said Nationwide spokeswoman Elizabeth Stelzer.
Customers with bundled auto and homeowner insurance policies produced a 95 percent renewal rate in 2012, according to the survey. That compares with an 81 percent renewal rate for auto policies and 83 percent for homeowner policies.
The annual study is in its 12th year and measures billing and payment, claims, interaction, policy offerings and price. It’s compiled from responses from 12,600 policyholders in May and June.
Mark Garrett, J.D. Power’s insurance research director, attributes the difference in popularity between bundling in the telecommunications and insurance industries to greater levels of competition in the latter. He said the practice helps both customers and insurers by streamlining paperwork.
“Bundling is mutually beneficial,” Garrett said.