While Price Entices Auto Insurance Customers in Japan to Buy a Policy, It Doesn’t Buy Their Loyalty
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AIU and Mitsui Direct General Insurance Rank Highest in Their Respective Segment in the Insurance Shopping Satisfaction Study, While Fuji Fire & Marine Insurance and E.design Insurance Rank Highest in Their Respective Segment in the Auto Insurance Satisfaction Study
TOKYO: 6 August 2012 — Although price has the greatest influence on customer satisfaction at the time of purchase of a new insurance policy, price alone does not promote long-term customer loyalty, according to the J.D. Power Asia Pacific 2012 Japan Auto Insurance Shopping Satisfaction StudySM and the 2012 Japan Auto Insurance Satisfaction StudySM both released today.
In both studies, satisfaction with insurance companies is measured in two segments based on the main selling method: agency-type insurers and direct-type insurers. Agency-type insurers primarily sell policies and interact with customers through insurance agencies, such as specialized agencies or automobile dealerships. Direct insurers sell policies and interact with customers directly, principally via the Internet or phone.
Policy has the greatest influence on satisfaction at the time of purchase of a new insurance policy, according to the 2012 Japan Auto Insurance Shopping Satisfaction Study. However, few customers who select their insurance provider based solely on price expect to remain with that carrier beyond the term of the policy. While 76 percent of customers who purchase through the direct-type channel select their insurer based on price, only 7 percent of customers who purchase a policy because of low price indicate that they “definitely will” renew with their insurer. In comparison, only 11 percent of customers who purchase through an agency-type insurer cite low price as a reason for selection, and 16 percent indicate that they anticipate renewing with their insurer.
In addition, for direct-type insurers and agency-type insurers alike, satisfaction and renewal intention rates are high among customers who select their insurer for reasons other than price, such as products that meet their needs.
The Auto Insurance Shopping Satisfaction Study also finds that customer-focused activities such as providing advice or proposals about compensation details or riders are highly effective in improving customer satisfaction.
“Demonstrating to customers that an insurance policy is suited to their needs through means such as proposals, explanations and information before they purchase the policy is critical to increasing customer satisfaction and starting long-term customer relationship,” said Chie Numanami, manager at J.D. Power Asia Pacific, Tokyo.
The 2012 Japan Auto Insurance Satisfaction Study, which surveys current policyholders, finds that nearly 90 percent of customers are loyal to their insurer. The average time frame of continuous policy ownership is 13 years for customers of agency-type insurers and four years for customers of direct-type insurers. Only 8 percent of customers have changed insurers in the past year.
“It is predicted that insurance market expansion will peak due to factors such as Japan’s declining birthrate and aging population and the trend toward reduced driving, especially among young people,” said Numanami. “In these circumstances, it is even more critical that insurers increase their yields among current customers and build long-term relationships.”
The study finds that overall satisfaction is high among customers who say they “definitely will” renew with their current provider as well as among long-term customers who have continuously held their policy for 10 years or longer, and is more than 30 index points (on a 1,000-point scale) higher, on average, than those who are less likely to renew. In addition, satisfaction in the interaction and claims factors is particularly high among these customers.
The study finds that overall satisfaction is 25 points higher, on average, among customers whose insurer sends a policy expiration notice at least two months before the expiration date than among customers whose insurer sends an expiration notice nearer the expiration date. Furthermore, satisfaction is higher when customers are contacted by the insurance company or agency within one week of receipt of the expiration notice. However, only 31 percent of customers receive an expiration notice at least two months before expiration and only 16 percent are contacted by the insurance company or agency within one week of receipt of the expiration notice.
“Meticulous, appropriate response on the part of the insurer or agency is the key to fostering relationships of trust with customers,” said Numanami.
2012 Japan Auto Insurance Shopping Satisfaction Study
The study, in its inaugural year, measures the satisfaction of customers who have recently purchased auto insurance for the first time or switched insurance companies. Overall satisfaction is measured in three factors (in order of importance): price, policy offering, and distribution channel, which measures the contact person or channel at the time of the policy purchase.
In the agency-type insurers segment, AIU ranks highest in customer satisfaction with an overall satisfaction score of 610 points. AIU performs particularly well across all three factors. Nipponkoa Insurance ranks second (586) and performs well in all three factors, while Fuji Fire & Marine Insurance ranks third (584), performing well in the policy offering and distribution channel factors.
In the direct-type insurers segment, Mitsui Direct General Insurance ranks highest in customer satisfaction with an overall satisfaction score of 669, and performs particularly well across all three factors. Saison Automobile & Fire Insurance ranks second (668), and performs well in all three factors. SBI Insurance ranks third (666) and performs well in the price factor.
The study is based on responses from 5,945 auto insurance (voluntary insurance) policyholders who have newly purchased auto insurance (including policyholders who switched from other insurance companies). The online study was fielded in May 2012.
2012 Japan Auto Insurance Satisfaction Study
The study measures the overall satisfaction of current automobile insurance (voluntary insurance) policyholders during the term of their auto insurance policy. Overall satisfaction is measured in five factors (in order of importance): policy offering; price; claims; policy statement; and interaction.
In the agency-type insurers segment, Fuji Fire & Marine Insurance ranks highest in customer satisfaction with an overall satisfaction score of 628 points and performs particularly well in the policy offering and policy statement factors. AIU ranks second (625), and performs well in the interaction and claims factors. Tokio Marine & Nichido Fire Insurance ranks third (617).
In the direct-type insurers segment, E.design Insurance ranks highest in customer satisfaction with an overall satisfaction score of 671 points and performs particularly well in the policy offering, price and claims factors. Saison Automobile & Fire Insurance ranks second (660) and performs particularly well in the policy statement, interaction and claims factors. SBI Insurance (659) ranks third and performs particularly well in the price factor.
The online survey, based on responses from 8,758 auto insurance (voluntary insurance) policyholders, was fielded in May 2012.
About J.D. Power Asia Pacific
J.D. Power Asia Pacific has offices in Tokyo, Singapore, Beijing, Shanghai and Bangkok that conduct customer satisfaction research and provide consulting services in the automotive, information technology and finance industries. Together, the five offices bring the language of customer satisfaction to consumers and businesses in China, India, Indonesia, Japan, Malaysia, Philippines, Taiwan and Thailand. Information regarding J.D. Power Asia Pacific and its products can be accessed through the Internet at www.jdpower.com. Media e-mail contact: email@example.com
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company providing performance improvement, social media and customer satisfaction insights and solutions. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, 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:
McGraw-Hill announced on September 12, 2011, its intention to separate into two companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, J.D. Power and Associates and Platts, a leader in commodities information. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.