NEW YORK – For the first time in five years, customer satisfaction among homeowners filing a property claim has slipped, largely driven by declines in satisfaction with the total settlement and service interactions, according to the J.D. Power 2016 U.S. Property Claims Satisfaction Study, released in late February.
The study measures satisfaction with the property claims experience among insurance customers who have filed a claim for damages by examining five factors (listed in order of importance): settlement; first notice of loss; estimation process; service interaction; and repair process. Satisfaction is calculated on a 1,000-point scale.
Amica Mutual once again topped the overall satisfaction rankings. A chart ranking the 21 companies included in the study appears on the second page of this article.
The $502.6 billion U.S. property and casualty insurance industry is entering a cycle of reduced profitability due to declining premium rates. Data from the 2016 U.S. Property Claims Satisfaction Study suggests that many insurers may already be shifting their focus away from customer satisfaction and toward areas of cost reduction. According to the study, satisfaction has declined by 5 points to 846 from 2015. The largest changes are in the service interaction factor (-8 points), driven by declines in both the local agent (-8) and claims professional (-28) sub factors.
Weather events are also a significant driver of declines in customer satisfaction this year. Survey results are significantly impacted by the way insurers handled a few major events, such as the winter storms that hit the Northeast in early 2015 and the severe weather/hail claims that hit Colorado and some surrounding states in late 2014.
However, weather alone does not fully explain the dip in overall satisfaction. For instance, simple service practices such as returning promised callbacks are down 1 percentage point from last year, and only 42% of customers indicate that when contacting their insurer someone was "always available immediately" to assist them. Responsiveness, a primary driver of service interaction satisfaction, is down significantly year-over-year among claimants interacting with local insurance agents or claims professionals (-0.09 points and -0.43 points, respectively, on a 10-point scale).
"During times of catastrophic events, insurance companies typically ramp up and have teams of claims professionals poised and ready to process claims locally in the affected region," said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. "However, maintaining a high level of support is not cost effective when there is a lull in large events and especially when rates begin to fall. Belt tightening to a leaner team can sometimes mean less support and longer response times to process claims. Insurers need to be aware when cost cutting impacts response times. The less satisfied customers are with the claim process, the less likely they are to renew their policy."
Key findings of the 2016 study
• Providing an Outstanding Claims Experience Can Generate Advocacy and Retention: The study finds that 81% of highly satisfied claimants (overall satisfaction scores of 900 or higher) say they "definitely will" renew their policy and 81% say they "definitely will" recommend their current insurer, while only 14% of displeased claimants (scores of 549 or less) say they "definitely will" renew and 7% say they "definitely will" recommend. Strikingly, 13% of displeased claimants indicate they have switched insurers due to their claims experience and 40% indicate an intention to shop within the next 12 months.
• Younger Property Claimants Looking for More Assistance with the Process: The desire for more help is strongest among the youngest groups such as Millennials, where 31% indicate they want additional help selecting a contractor. This suggests that younger customers, who presumably have not had the same tenure of home ownership and also have less experience in having property work done, are looking toward their insurer to help coordinate the repairs.
• Non-Weather Water Claims Not Weathering Satisfaction: Non-weather water claims are the most frequently reported claims in 2016. Satisfaction with the handling of non-weather-related water damage dropped 19 points to 835, while satisfaction with the handling of hail damage claims is highest at 858. Additionally, satisfaction with theft claims is 840 (+20 points from 2015), while satisfaction with fire claims is 839 and with mold 834 (-27 points and -38 points, respectively).
Next page: Company rankings
- 20 ways to make clients feel valued
- Autonomous vehicles predicted to radically shrink auto insurance sector, change type, amount of coverage sold
- Premium increases become sticking point for U.S. auto insurance customers, J.D. Power finds
- Company looks to make buying LTCI coverage common by selling through worksite
- CBO: $321 billion reduction in deficit, 22 million more uninsured over next decade with new Senate health bill
- Something to think about on National Insurance Awareness Day: 37% of adults skip life insurance
- Trio of big storm systems lead to 42% drop in 1Q net income for P&C insurers
- MetLife’s individual life, annuity business spin off to Brighthouse clears final regulatory hurdle