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Generation Y drivers miffed at car insurance companies

By Posted : 12/06/2010

Generation Y drivers miffed at car insurance companiesSignificant differences in satisfaction levels exist between younger and older auto insurance customers, according to J.D. Power and Associates.

That's among findings of the J.D. Power and Associates 2010 U.S. Auto Claims Satisfaction Study, released in November. Compared with baby boomers, Generation Y (those born from 1977 to 1994):

  • Spent more time reporting their claims
  • Were more inclined to have unanswered questions after calling to report a loss
  • Said they were more inconvenienced during the claims process

Two factors may explain their dissatisfaction, says Jeremy Bowler, senior director of the insurance practice with J.D. Power and Associates in Troy, Mich.

"They may have a different set of expectations," he says. "They're focused on now, and quick turnarounds. Relative to their expectations, they may be less pleased with the same service that gets higher ratings from boomers."

In addition, it's possible that because they're younger, members of Generation Y may not be getting the same level of service as older people, Bowler says.

Time and car insurance satisfaction

Consumers' happiness with car insurance companies is closely linked to the time involved in the claims settlement, as well as the settlement's fairness, Bowler says. That's why a policyholder's attitude about the settlement process determines more than one-third of the satisfaction index score.

Twenty-five percent of Generation Y consumers reported having to spend money over and above their deductible - an average of $319 more.

That compared unfavorably with the 19 percent of boomers who had to spend money above their deductibles. Boomers averaged $209 in additional costs.

In addition, boomers took an average of 15 minutes to report claims, while members of Generation Y took 22 minutes. Despite the added time, the latter were twice as likely to have had unanswered questions.

Looking at all ages, overall customer satisfaction fell by 5 points to 837 on a 1,000-point scale when compared to 2009 study results. However, that decline wasn't significant in the context of the tremendous gain in satisfaction reported in 2009, Bowler says.

In the years leading up to 2009, the index registered a steady but very gradual rise year by year. The increased satisfaction was a result of improvements made by the industry and its body shop partners in communicating with consumers and shortening the amount of time it takes to complete repairs.

But satisfaction spiked last year in the wake of the nation's severe economic downturn.

"We saw with the decline in driven miles in the recession, cycle time for repairs had shrunk by a full two days, due to the fact there was unused capacity at body shops," Bowler says.

As a result, customer satisfaction soared by 24 points in 2009.

Bowler says a large percentage of that gain in satisfaction continued even as the economy has shown signs of life.

"We thought this would be a transitory finding related to the recession," he says. "But this year, cycle time only crept up by about half a day. So, many of the gains in satisfaction seen a year ago were retained."

Gaps in car insurance knowledge

The study also revealed that regardless of age, most consumers had a much better understanding of what was covered in their policies once they had a claim.

"It's like they never read the coverage until they had a claim," he says.

Moreover, the study indicated the period of about two or three weeks following a claim proved pivotal in defining attitudes toward insurers.

"I will become tremendously loyal and very much price inelastic, or the inverse is true" he says. "If I am displeased, and you did a poor job, it's not simply that I'm less loyal. Thirteen percent of Generation Y and 7 percent of boomers will leave within the next year, and find coverage elsewhere."

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