Customer satisfaction with their "interactions" with life insurers jumped 31 points in a 2016 J.D. Power study. (Photo: Thinkstock)

Multiline carriers nabbed the two top spots in a recent customer satisfaction survey of life insurers.

The “J.D. Power 2016 Life Insurance Study,” released today, ranks State Farm and Nationwide as, respectively, the No. 1 and No. 2 carriers in customer satisfaction. State Farm received an “Overall Customer Satisfaction Index Score” of 828, with Nationwide trailing at 806, on a 1,000-point scale.

Related: The top 100 life & health insurance companies of 2015

The study examines the “needs and expectations” of life insurance customers, and explores how the insurance carriers can improve “customer satisfaction and advocacy.” Now in its third year, the report measures individual life insurance customer satisfaction with their insurer based on performance in four factors (in order of importance):

    • Price;
    • Policy offerings;
    • Annual statement and billing; and
    • Interaction.

The report is a sequel to a 2014 J.D. Power study, which concluded that individual customers of life insurers are “the least satisfied customers” of all insurance and financial service providers benchmarked by the market research firm.

“This disparity provides life insurance carriers with an opportunity to make process improvements that better reflect the preferences of current customers and encourage life policy shoppers to consider and ultimately select their brand,” J.D. Power states in a summary of its 2016 study. The report adds that, since 2014, carriers have intensified efforts to fufill expectations of existing customers and attract new ones.

In the aggregate, gains have been modest: life insurers’ overall score on J.D. Power’s 1,000-point scale rose one point between 2015 and 2016. However, customer satisfaction with their “interactions” with life insurers’ jumped 31 points year-over-year to 839. 

J.D. Power credits the increase to improvements in the insurers’ digital channels. More than a quarter (27 percent) of customers now communicate with their insurer via digital channels, up from 21 percent from 2015.

The upward trend is most pronounced among baby boomers: One-third (33 percent) of them have submitted an application for life insurance online. That compares to only a quarter of Gen Y applicants.

For both demographic groups, most applications are still done the old-fashioned way: Sixty percent of millennials and 43 percent of boomers have submitted an application in-person.

Related: 17 ways to better market to millennials

“Life insurers are trying to compete in a stagnant pricing market by focusing on communicating with their customers,” said J.D. Power Vice President of U.S. Insurance Operations Greg Hoeg in a press statement. “They’re getting more engaged, which is much to the delight of their customers.”

“The challenge for insurers is to understand what, and how often, to communicate,” he added. “It’s not as easy as assuming the younger generations want to be self-sufficient and only use digital channels or that older generations only want to communicate by talking with another person.”

Among the report’s additional findings:

    • Twelve (12) percent of both boomers and millennial customers had exclusively digital contacts with their insurer in the past 12 months.

    • Interaction satisfaction is highest among Gen Y customers (851) when they contact their insurer via both digital and non-digital channels.

    • Three (3) percent of customers received a wearable device when applying for a policy and 5 percent of customers receive a discount from their insurer by using a wearable device.

    • Forty-six (46) percent of all customers and 68 percent of Gen Y customers say they would consider wearing a tracking device if their insurer offered rate incentives.

Keep reading for detailed listings from J.D. Power’s 2016 life insurance customer satisfaction rankings.

 

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Insurance Rankings

State Farm ranks highest in life insurance customer satisfaction for a third consecutive year, with a score of 828. Nationwide ranks second with a score of 806. Northwestern Mutual ranks third with a score of 799.

Power Circle Ratings Legend: 5 – Among the best; 4 – Better than most; 3 – About average; 2 – The rest

                                                 

 

Overall Customer Satisfaction Index Scores 

J.D. Power.com Power Circle Ratings

 

(Based on a 1,000-point scale)

For Consumers

State Farm

828

5

Nationwide

806

4

Northwestern Mutual

799

4

Pacific Life

790

4

MassMutual

780

3

MetLife

779

3

New York Life

774

3

Principal Financial

774

3

Life Industry Average

771

3

Prudential

770

3

Genworth Financial

766

3

Mutual of Omaha

766

3

Guardian Life

760

3

AXA Financial

752

3

Voya Financial (ING)

745

2

Lincoln Financial

744

2

Protective Life

742

2

John Hancock

739

2

AIG

738

2

Transamerica (AEGON)

719

2

Primerica

717

2

Midland National Life

713

2

The 2016 U.S. Life Insurance Study is based on responses from 6,455 individual life insurance customers. The study was fielded in June and July 2016. 

Award-Eligible Insurance Companies Included in the Study

Company

CEO Name

City

AIG

Peter Hancock

New York, N.Y.

AXA Financial

Christopher Condron

New York, N.Y.

Genworth Financial

Thomas McInerney

Richmond, Va.

Guardian Life

Deanna Mulligan

New York, N.Y.

John Hancock

Andrew G. Arnott

Boston, Mass.

Lincoln Financial

Dennis Glass

Radnor, Pa.

MassMutual

Roger Crandall

Springfield, Mass.

MetLife

Steven Kandarian

New York, N.Y.

Midland National Life

Dave Welch

Sioux Falls, S.D.

Mutual of Omaha

James Blackledge

Omaha, Neb.

Nationwide

Stephen Rasmussen

Columbus, Ohio

New York Life

Theodore Mathas

New York, N.Y.

Northwestern Mutual

John Schlifske

Milwaukee, Wis.

Pacific Life

James Morris

Newport Beach, Calif.

Primerica

Glenn Williams

Duluth, Ga.

Principal Financial

Daniel Houston

Des Moines, Iowa

Protective Life

John Johns

Birmingham, Ala.

Prudential

John Strangfeld Jr.

Newark, N.J.

State Farm

Michael Tipsord

Bloomington, Ill.

Transamerica (AEGON)

Mark W. Mullin

 San Francisco, Calif.

Voya Financial (ING)

Rodney Martin Jr.

New York, N.Y.

The 2016 U.S. Life Insurance Study is based on responses from 6,455 individual life insurance customers. The study was fielded in June and July 2016.