In recent decades, many insurance companies have demutualized. Translation: They converted from mutual insurers owned by their policyholders to stock insurers owned by shareholders.
That may seem like inside-baseball minutiae to most consumers. But it's a key differentiator for Northwestern Mutual and New York Life Insurance Co., the top two finishers in the most trusted life insurer category in this year's IBD Most Trusted Financial Companies survey.
"Our mutual structure allows us to operate with a different mindset," said John Schlifske, chief executive of Northwestern Mutual. "Every dollar Northwestern Mutual generates is for our policyowners' benefit — to make them more financially secure. That policyowner-centric purpose guides our business strategy, creates differentiation and, in our case, fuels long-term growth and relevance. When Northwestern Mutual does well, our policyowners do well."
IBD's fourth annual list of the Most Trusted Financial Companies is based on a June-July survey in which thousands of people rated their financial service providers on the trust attributes that consumers said were most important to them. Our sister company, MarketWatch, is co-branding the report for a second year.
2023 Survey
For IBD's Most Trusted Financial Companies in 2023, we asked 7,597 survey participants about how they judged the financial soundness of the financial companies they do business with. We also added online banks to our survey this year. The survey was conducted in June and July by IBD's polling partner, TechnoMetrica Market Intelligence. Read our overview story, IBD's Fourth Annual Survey Of The Most Trusted Financial Companies.
3 Most Trusted Life Insurance Companies
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | |
|---|---|---|---|---|---|---|---|---|---|
| Northwestern Mutual | 82.2 | 89.8 | 83.8 | 86.5 | 86.1 | 80.5 | 67.1 | 73 | |
| New York Life | 80.4 | 86.7 | 80.9 | 85.9 | 83.1 | 79.8 | 65.8 | 73.6 | |
| Nationwide | 78.3 | 82.1 | 77.1 | 80.4 | 78.4 | 79.7 | 70.8 | 76.1 |
Unlike stock insurers, mutual companies pay dividends to policyholders. Because the policyholders double as owners, they receive payments that represent part of the company's profits.
"When you purchase a Northwestern Mutual insurance product, we share our success with you," Schlifske said. In 2023, its policyowners are receiving $6.8 billion in dividends, he says, and that drives loyalty and high customer retention.
Another Mutual Insurance Company Stands Out
Northwestern Mutual was founded in 1857. New York Life, which took the No. 2 ranking as the most trusted life insurer in this year's survey, is even older. It launched in 1845.
"A lot of companies demutualized in the 1990s. A few of us didn't," said Aaron Ball, senior vice president at New York Life, America's biggest mutual life insurer. "It's the ultimate alignment of interests between the company and our policyholders because they are our owners."
The life insurers that demutualized had to change their business model, Ball says. In some cases, they shifted their focus from products that require significant capital to manage, such as selling life insurance, to other areas such as investment management or administering employee benefit programs.
"Many of the companies that demutualized shifted to independent agents," Ball said. It's generally more costly for an insurer to maintain its own in-house sales force.
Read Our Category Stories On The 2023 Most Trusted Financial Companies In Investing, Insurance, Credit Cards And Banking
New York Life, which recruits and trains its own agents, has about 12,000 salespeople in all 50 states. In addition to offering life, disability, long-term care insurance and wealth management, they sell annuities and offer what Ball calls "holistic advice and guidance" to help policyholders with more comprehensive financial planning.
"Because the agents have a strong relationship with us, the customer often gets better service from their agents," he said. "They don't just sell our products. They also provide guidance to help the customer protect those assets" from unforeseen and potentially disruptive life events.
Nationwide also ranked among the top three life insurance companies, out of nine companies that qualified for the category. Nationwide ranked first in the attributes of price and sensitivity to customer needs.
Top Insurance Companies For Auto, Home Coverage
For auto and home insurance, the top finisher for the fourth year in a row was USAA — out of 11 companies in the home insurance category and 13 in the auto insurance category. Founded in 1922 by military officers, USAA sells insurance to current and former U.S. military members, their spouses and children.
Erie Insurance claimed the No. 2 spot in both auto and home insurance. A longtime innovator in property and casualty coverage, Erie introduced an auto insurance policy in the 1930s that became a template for the industry. It continues to earn customer loyalty through its offerings.
3 Most Trusted Auto Insurers
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | |
|---|---|---|---|---|---|---|---|---|---|
| USAA | 87.2 | 92.6 | 89 | 91.6 | 86.9 | 86.3 | 78.9 | 79.1 | |
| Erie Insurance | 83.8 | 87.6 | 89.7 | 84.6 | 79.5 | 87.2 | 76.9 | 76 | |
| Auto-Owners Insurance | 80.5 | 86.8 | 84 | 84.7 | 81.2 | 80.4 | 70.3 | 68.1 |
Frank Vargish, an attorney in Lancaster, Pa., hails Erie's "rate lock" feature. Customers can pay the same price year after year for car insurance, even if they submit a claim, as long as they don't make certain changes to their policy such as adding or removing a vehicle or driver.
"We're not planning on making any changes, so it's a great option for us," Vargish said.
Perhaps the best way to gauge an insurer's performance is its handling of claims. Erie usually passes the test with flying colors.
Vargish lauds Erie's commitment to service. After a recent car accident that wasn't his fault, he appreciated how Erie's team responded promptly and provided a "very fair" settlement.
Also among the top companies in the auto insurance category this year was Lansing, Mich.-based Auto-Owners Insurance.
3 Most Trusted Home Insurers
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | |
|---|---|---|---|---|---|---|---|---|---|
| USAA | 86.8 | 91.3 | 87.9 | 89.5 | 87.8 | 86.5 | 78.9 | 80.4 | |
| Erie Insurance | 83.8 | 89.2 | 83 | 83.3 | 86.2 | 81.7 | 79.1 | 79.7 | |
| State Farm Insurance | 77.4 | 86.1 | 79.9 | 82.3 | 78 | 77.5 | 61 | 67.6 |
Jim Pelish, a retired trial lawyer in Rice Lake, Wis., also praises Erie's claim service. In July, a severe hailstorm damaged his roof.
"Lots of people in my town suffered hail damage," he said. "Everyone was lined up to get their claim adjusted. Erie's adjuster showed up six days after I called in the claim. When he was through inspecting the damage, we sat down on the porch and went through everything. Within three hours, he transferred money into my bank account. I was impressed."
Insurers often resort to industry jargon when interacting with customers. But IBD's survey respondents welcomed Erie's efforts to explain coverages in plain English.
"Their written communication is very detailed but easy to read," said Mary McCandless, a financial analyst in Winston-Salem, N.C. "And I get plenty of time before renewal to review everything."
Dan Beard, a retired medical researcher in Harrisburg, Pa., has insured his cars with Erie for about 50 years and says he's "never had a problem" over that time. He began insuring his home with Erie in 1979.
"They've been dependable as heck," Beard said. When his German shepherd chewed through his car's seat belts, he was pleasantly surprised that Erie paid to replace them.
Also among the top three companies in the home insurance category was State Farm Insurance. (Read all our 2023 Most Trusted Financial Companies.)
