Judging an insurer by its J.D. Power rankings

Gina Roberts-Grey

If you can't judge a book by its cover, is it wise to judge an insurance company by its J.D. Power and Associates rankings?

J.D. Power, based in California, is a market research powerhouse that evaluates companies' performances based on customer satisfaction surveys. J.D. Power releases the findings of numerous studies throughout the year, including several about home and auto insurers.

These studies can help consumers make educated choices about insurance providers. J.D. Powers' offerings typically provide scores for various factors, including how well an insurer deals with customer service and claims.

"A company's performance in the J.D. Power study is a reflection of how current customers of that insurance company rate their experiences to date," says Jeremy Bowler, senior director of the insurance practice at J.D. Power.

The insurance studies produced by J.D. Power include:

  • Property Claims Satisfaction Study.
  • Insurance Shopping Study.
  • National Auto Insurance Study.
  • National Homeowners Insurance Study.
  • Auto Claims Satisfaction Study.

Consumer beware

Experts say it's important for consumers to truly understand these rankings before using them as a guide while shopping for insurance.

Steve Brooks, president of B&B Premier Insurance Solutions Inc., an independent insurance agency in California, says that if you're reviewing the J.D. Power data when considering an auto or home insurer, you should figure out how that information relates to the types and prices of coverage available in your area.

"And if you talk to a representative from a single company, like an agent from Allstate or State Farm, make sure to speak to representatives from more than one insurer to get a clear picture of all the options available to you," Brooks says.

Furthermore, pay close attention to all of the J.D. Power ratings to best gauge which insurers may be right for you. For instance, if price is the driving factor in your decision-making, you might not be care about which company earned high marks for their call centers. Still, that call-center information could tip the scales in favor of one insurer over another.

"You may want an insurance company with a local agent that provides terrific customer service," Brooks says, "or be focused solely on customer satisfaction with price."

Behind the scorer's curtain

J.D. Power says you can rest assured that thousands of "real" people complete its surveys. The company weighs consumers' responses about such things as performance and pricing to come up with rankings and quality awards for auto and home insurers. Many of those insurers have a national presence.

"Our results reflect the average performance of each company profiled, based on hundreds of individual customer survey responses per brand," Bowler says.

For instance, the 2012 U.S. Insurance Shopping Study was based on responses from more than 16,100 shoppers who had requested an auto insurance quote from at least one insurer in the past 12 months and included more than 50,000 unique evaluations. J.D. Power's studies don't take into account the opinions of its employees.

To determine an insurance company's overall score, J.D. Power asks consumers a series of questions about the policy offerings and prices. Insurers can earn up to 1,000 points. In the 2012 study of auto insurers, the top score of 857 went to The Hartford. Some of the criteria for measuring The Hartford and its competitors include:

  • Consumer interaction with agents, customer service representatives and other company representatives.
  • Billing and payment.
  • Handling of claims.
  • Accessibility of local agents.
  • Overall impressions of insurer's website.

A high J.D. Power insurance score generally is in the 800s; few insurers earn marks higher than the mid-800s.

"In our experience, those companies that achieve the highest levels of overall customer satisfaction distinguish themselves through everyday service excellence, as well as the way they rise to the challenge when a customer has an issue or a problem," Bowler says. "Often, we find that the best companies know when they've made a mistake and quickly strive to correct it."