Over 50% of consumers don’t trust their auto insurance company

Auto insurance continues to be a sticking point for car owners in the U.S. and with premiums rising, trust is eroding.

Context: According to the latest J.D. Power 2024 U.S. Auto Insurance Study, these sky-high premiums do not seem to be coming down anytime soon. 

• J.D. Power notes that auto insurance rates are up 11.2% on average over the past year and insurers are losing five cents on every dollar of each premium they rack up.

• The Consumer Price Index (a key measurement of inflation) tracks motor vehicle insurance. The index rose 1.8% in April, a slower pace than the month-over-month increase in March. The kicker is, compared to a year ago, the increase is an eye-popping 22.6%.

Set up: What J.D. Power set out to do was discover how satisfied consumers are overall with their auto insurance companies given premiums have shot up. 

The results? Trust has a massive influence on customer satisfaction and brand loyalty but most insurers are missing the mark. 

• 51% of customers fall into the low-trust category, while 15% have high levels of trust and 34% have mid-levels of trust.

How is trust measured in this context? J.D. Power doesn’t provide specifics, only to say that it hinges on companies that “will come through when they are needed.”

Key quote: “Auto insurers are in a tough position right now,” said Breanne Armstrong, director of global insurance intelligence at J.D. Power. “With repair costs still rising—and with more than 20% of vehicles involved in collisions now considered total write-offs—insurers are still losing money, despite passing along huge price increases to their customers.”

But if a brand can increase its level of trust, it will be well-rewarded. 90% of consumers in the “high-trust” category will likely renew their policy. Compare that to just 30% among the “low-trust” segment. 

Looking ahead: It’s wild that insurers are still losing money even though they’re passing along very high premiums to their customers. And since insurance companies typically lag behind market trends, higher premiums will likely stick around. This will surely put even more pressure on insurance companies to retain their customers.

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