COB Research Spotlight: Dr. David Pooser

Every driver is required to have insurance, but how satisfied are they with their insurance carrier? This is a question that Dr. David Pooser seeks to answer about the nearly $400 billion automobile insurance industry.

“Several years ago, J.D. Power provided my co-author and me with consumer marketing data on automobile insurance satisfaction,” Pooser said. “I have since worked on several research projects with their data on how customer satisfaction relates to insurer profitability and how satisfaction is affected by personal and experiential factors.”

In the research, Pooser examines individuals’ satisfaction with the price they pay for coverage as well as their satisfaction with the claims process after a loss. This is done through observing individual demographic and socioeconomic characteristics, personal experiences with auto insurance, and facets of the insurance marketplace that may affect different areas of auto insurance satisfaction.

“For most individuals, the only interactions they have with their auto insurer are when they shop for coverage and if they experience a claim; it is important that insurance companies ‘get things right,’” he said.

Pooser and his co-author found that customer satisfaction in automobile insurance is affected by a person’s experiences, by their individual characteristics and by the insurance marketplace they can access. Some major takeaways include:

• People with claims are generally much more satisfied than those who do not experience a claim. This is where insurance companies get to prove their worth, and on average it seems like they do a good job.
• People are more satisfied when their claims are settled quicker. This is no surprise, but the issue is that more complicated claims require more time to fully investigate and settle. Insurers should consider how they manage consumers’ expectations when a claim is going to take more time to be paid.
• Switching automobile insurance companies often leads to greater price satisfaction, but people who stick with their insurers longer have the greatest claims satisfaction.
• Shopping with a local agent tends to lead to greater satisfaction. Local agents can provide practical advice about coverage limits, shopping around, price vs. value, and claims. Consumers also report greater satisfaction when they understand their policies better. Consumers should take time to read their policy documents and get to know their coverages.
• Credit score is highly correlated with auto insurance claims and many insurance companies provide a discount to individuals with better credit scores. Improving your credit score is one way you can try to reduce your auto insurance costs.
• Older, female, and married drivers are more satisfied with auto insurance than younger, male and unmarried drivers. The data does not show why, but an insurance company should consider how demographic factors affect customers’ perception and experiences. There is a definite link between customer satisfaction and profitability and insurers, so improving satisfaction outcomes can also improve profits.

Pooser believes that greater consumer education can improve their level of auto insurance satisfaction.

“Better interactions between auto insurers and consumers should lead to tangible improvements in automobile risk and personal well-being,” he said. 

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