Best & Worst Annuity and Life Insurance Providers: J.D. Power, 2023
Customer apathy toward annuities and life insurance is a perennial challenge for providers. Satisfaction is rising as more clients engage with digital tools and start using life insurance and annuities for financial planning, in addition to such final planning services as death benefits and burial insurance, according to a study released Thursday by J.D. Power.
“Sales of life insurance enjoyed a brief surge in popularity during the height of the pandemic, while sales of annuities have more recently soared,” Breanne Armstrong, director of insurance intelligence at J.D. Power, said in a statement. “But outside of that, customer satisfaction and engagement have generally declined the longer customers hold onto these products.”
That is starting to change, Armstrong said.
“Customers who interact with the digital offerings of their providers are more engaged, have higher levels of satisfaction and are more likely to incorporate their life insurance and annuity products into their overall financial plans,” she said.
The study is based on two surveys that J.D. Power conducted from May through July. One measured the satisfaction of 3,579 customers of the largest U.S. annuity companies on their performance in the same five key factors.
The other looked at the satisfaction of 5,588 clients of the largest U.S. individual life insurance companies, based on their performance in communication, interaction, price, product offerings and statements.
Satisfaction Surges With Digital
The research showed that customer satisfaction with annuity products averages 800 (on a 1-1,000 scale) this year, an 11-point increase from 2022. This, too, is driven in large part by increased digital engagement.
Overall satisfaction levels are highest when annuities are purchased via provider websites, J.D. Power says, and so are customer satisfaction with the application and orientation process.
J.D. Power also found that 72% of annuity customers can now be called digital clients who regularly interact with their provider via website, email, chat, text or mobile app. Overall satisfaction among digital customers is 819, compared with 784 for those who have no digital interaction and 726 for those who have no interaction at all with their provider.
The number of customers who buy life insurance policies via insurer websites accounts for 13% of all life insurance purchases, up from just 6% in 2019. All told, 62% of life insurance customers now interact with their insurer via digital channels.
Overall satisfaction is 823 (on a 1,000-point scale) when customers use digital channels; that is 79 points higher than when customers do not interact via digital.
The proportion of life insurance customers who buy their policies for both financial and final planning reasons has increased to 39% in 2023 from 30% in 2022.
Overall customer satisfaction with life insurance policies is significantly higher when they are purchased for both reasons, as opposed to only final planning or financial planning alone.
Even for products purchased through agents or advisors, adding in digital interaction only increases customer satisfaction, the study found. When life insurance customers who bought through an agent or advisor interact only non-digitally, satisfaction is 795. It increases to 821 when digital interactions are added.
This trend also exists among annuity customers who purchased their annuity through an agent or advisor, with satisfaction at 809, versus 784 for those who did not have this type of interaction.
See the accompanying charts for the annuity and life insurance providers with the highest and the lowest customer satisfaction.