Toronto, Ontario – A new study by J.D. Power and Associates found that 38 per cent of Canadian auto insurance policyholders experienced a rate increase in 2009, but only 58 per cent were notified of the increase in advance.
Only 33 per cent received a rate increase in 2008 by comparison. J.D. Power found that notifying a customer of the extra cost increased the customer’s satisfaction with the company. When consumers were informed, satisfaction averaged 723 on a 1,000 point-scale, but averaged only 659 points among policyholders who weren’t told that their rates would go up.
“A rate increase tends to be a moment of truth for insurance policyholders and their providers,” said Lubo Li, senior director and practice leader of Canadian financial services and insurance. “Insurers that take proactive measures to notify policyholders in advance may help to minimize the negative impact of a rate increase.”
Li said that in Ontario, premium adjustments adopted by many insurers earlier this year resulted in 43 per cent of auto insurance customers experiencing a rate increase. However, only 59 per cent of them were notified in advance.
Across Canada, policyholders reported premium increases of $200 per vehicle in 2009, when compared with their 2008 rates. Price increases also have a negative effect on customer loyalty rates, with 31 per cent reported shopping for a different provider. Only 43 per cent said they “definitely will” renew with the current provider, down from 46 per cent in 2008. Nearly one-fourth of policyholders said they probably or definitely will switch providers, compared with 19 per cent in 2008.
Among insurance providers, Belairdirect ranked highest in customer satisfaction among private full-coverage automotive insurance providers, with a score of 753 on a 1,000-point scale. The company also performed particularly well in policy offerings, price/premium, and customer service. Alberta Motor Association ranked second, at 741, and TD Insurance Home and Auto was third, at 725.