Category Archives: Customer Satisfaction

Homeowners Insurance: Customer Satisfaction Increases

As 2012 appears to be continuing the trend of heavy thunderstorm losses (hail and tornadoes) seen in 2011, the just-released 2012 U.S. Property Claims Satisfaction Study from J.D. Power and Associates makes for a timely read.

The study, which measures customer claims experiences based on homeowners claims filed during 2011, found that overall satisfaction in 2012 improves to 833 on a 1,000-point scale, an increase of 10 points from last year’s study.

The improvement comes despite the record number of storm losses seen in 2011, when there were 99 weather-related disasters in the U.S., 14 of which totaled more than $1 billion in damages each, according to the Insurance Information Institute (I.I.I.).

In a press release, Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, says:

A period of tremendous volatility in the industry, caused by a large number of devastating storms, led us to anticipate that satisfaction would decline, but that clearly was not the case.†

And:

The industry as a whole did well in not only handling the day-to-day claims, but also the large volume of claims associated with those major events.†

Other key takeaways from the study, include the fact that high wind claims, which include tornado and hurricane damage, accounted for 33 percent of all claims filed, an increase from 21 percent in last year’s study.

Yet, among those who filed a claim for high wind damage, satisfaction remained stable, relatively unchanged with last year.

Claims experience by region shows mixed results, however. For example, satisfaction in the South Atlantic and Northeast regions, both of which had increase in high wind claims due to hurricanes in 2011, improved 36 points and 18 points respectively on the prior year’s study.

In contrast, overall satisfaction the East North Central Region, which also had an increase in high wind claims due to tornado damage, satisfaction declined by 14 points. The West South Central region which saw an increase in hail-related claims also saw an eight-point drop in satisfaction year over year.

Not surprisingly, the study finds that a positive claims experience fosters significantly higher long-term loyalty among claimants, while a negative claims experience may cause claimants to be more likely to switch insurers.

Check out I.I.I. facts and statistics on homeowners insurance and tips on how to file a homeowners claim.

Customer Satisfaction With Homeowners Insurance

The just released J.D. Power and Associates 2011 U.S. National Homeowners Insurance Study contains a number of interesting findings, but a couple of key takeaways really caught our attention.

For example, homeowners who carry sufficient insurance coverage to fully rebuild their homes in the event of a total loss are more satisfied with their insurer than those that don’t, the study found.

Approximately 16 percent of homeowners insurance policyholders indicate they carry less coverage than would be required to fully rebuild their home in the event of a total loss.

Among those policyholders, satisfaction averages 739 on a 1,000 point scale in 2011 – more than 40 points lower than among policyholders who say they have sufficient coverage.

J.D. Power notes that it is key for homeowners to ensure that their insurance coverage is sufficient before a disaster strikes.

While many homeowners may not give much thought to their insurance under normal circumstances, the moment they have to file a claim, the value of coverage becomes realized.

The study found  that customers who have filed a claim tend to be more knowledgeable about their policies – and also more satisfied – than those who haven’t had a claims experience.

Overall satisfaction with homeowners insurance companies averages 769 in 2011 – improving by 19 points from 2010, according to the study. While satisfaction improved in all five factors, the greatest gain was in the interaction factor.

This year’s study is based on responses from more than 9,100 homeowners insurance customers, fielded between April and July 2011.

Check out this I.I.I. video for tips on making sure you are  adequately insured.

Check out I.I.I. facts and stats on homeowners insurance.

Homeowners Claims: A Moment of Truth

Insurers that provide highly satisfying home insurance claim experiences are more likely to see increased customer retention and loyalty, according to a new study from J.D. Power and Associates.

Its 2010 U.S. Home Claims Satisfaction Study finds that among home insurers that provide highly satisfying claims experiences, 71 percent of their claimants indicate that they “definitely will† renew with their insurer and only 4 percent say they have switched insurers following their homeowners claim.

In comparison, among insurers with lower levels of satisfaction, only 53 percent of claimants say they plan to renew, while 10 percent say they have switched insurers. Fewer than one-half (48 percent) of these claimants say they “definitely will† recommend their insurer.

In a press release, Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates notes that suffering a property loss and filing a claim tends to be an emotionally charged experience – often more so than an auto claim.

As a result, the property claim represents a moment of truth for insurance claimants regarding their insurers, so it’s particularly important that the claims experience is handled in a a satisfying manner to ensure claimants remain with the insurer in the long run.†

The study finds that insurers performing key services, such as clearly explaining the claims process, giving claimants an expectation of how long the claim will take and ensuring claimants know who to contact with questions, may considerably improve satisfaction with the claims experience.

Among claimants who say that their insurer delivered on all of the top service practices, satisfaction averages 929 points, but drops to 650 among claimants whose insurers missed four or more of the top service practices

The study underscores an important point – insurers that clearly explain the claims process can make it easier and a lot less stressful for their customers.

To help demystify the claims-filing process, check out I.I.I. tips  on how to file a homeowners claim  and the I.I.I. video  Filing a Homeowners Insurance Claim: Six Steps.

Marginal Decline in P/C Customer Satisfaction

Customer satisfaction with the property/casualty insurance industry slipped a bit in the fourth quarter of 2009. According to the latest University of Michigan American Customer Satisfaction Index (ACSI), the p/c sector showed a slight drop of 1.2 percent to a score of 80 in Q4 2009. That said, several p/c insurers improved their customer relationships in 2009. Among property/casualty insurers, four of the five measured companies improved (with one steady), but the gains were all small. ACSI data indicates the decline in the industry overall is due to a 3 percent ACSI drop in the aggregate of all other smaller insurers, which are challenged to provide the same rates as their larger competitors, focusing instead on service. In the aggregate, customer satisfaction with the finance and insurance sector (including banks, credit unions, and property, life and health insurance) improved 1.4 percent to an ACSI score of 77.1. Even though some individual banks plunged in customer satisfaction, banks and credit unions as a whole were unchanged from a year ago with ACSI scores of 75 and 84, respectively. Life insurance posted a small improvement of 1.3 percent to a score of 79, while customer satisfaction with health insurance went up 2.7 percent to a record-high score of 75. The index measures customer expectations, perceived quality and perceived value of companies in various industries.

The Value of Homeowners Insurance

Despite recent housing market troubles, homeowners appear to be very happy with their insurance companies. The J.D. Power and Associates 2009 Homeowners Insurance Study reports that for the first time in five years, overall customer satisfaction with homeowners insurance has increased significantly, driven by favorable perceptions of the value of their policies. Satisfaction with homeowners insurance averages 773 on a 1,000-point scale in 2009 – an increase of 21 points on 2008. J.D. Power says the overall increase is primarily due to substantial improvements in the price, policy offerings and billing and payment factors. Satisfaction with price improved most notably – increasing by 46 points from 2008. The apparent prevalence of discounts also contributed to improved perceptions of policy value. The study found that the percentage of policyholders who reported receiving discounts increased in 2009 to 84 percent from 81 percent in 2008. Of the 27 insurers included in the study, 10 have experienced notable increases from 2008 in the proportion of their customers who report getting discounts. J.D. Power noted that policyholders who receive discounts are significantly more satisfied than those who either do not receive discounts or are unsure of the discounts they receive. Check out I.I.I. facts and stats on homeowners insurance.

Customer Retention Critical Amid Recession

Retaining existing customers has never been more important for insurance carriers in terms of long-term profitability, according to a new survey from J.D. Power and Associates. The 2009 Personal Insurance Retention Special Report finds that even though 90 percent of customers overall stayed with their insurer during the past 12 months, those households that are more impacted by the recession present a real challenge for insurance carriers. The report finds that in the past year, 30 percent of households with annual incomes below $50,000 shopped for a new insurance carrier and 45 percent of those customers eventually switched carriers. In contrast, only 26 percent of more affluent households (annual incomes of $100,000 or more) shopped for a new carrier, with only 31 percent of customers eventually switching. The survey also finds that there are significant variances in customer retention between different consumer demographic or attitudinal groups. For example, while retention rates average 91 percent among married customers, the average retention rate among divorced policyholders is 89 percent and among single policyholders 87 percent. J.D. Power and Associates notes that auto insurers need to tailor their products, services and retention tactics to specific attitudinal or demographic segments, rather than operating on a “one size fits all† mentality. The report also notes that retention rates are particularly high among customers who bundle multiple insurance products. Check out I.I.I. auto insurance information.  

Satisfying Agents Good for Business

Agent satisfaction can have a major impact on policy growth for an insurance company according to a new study from J.D. Power and Associates. It found that as agent satisfaction increases, the likelihood of agents increasing their premium business with an insurer also rises. In 2009, nearly 70 percent of agents with satisfaction scores averaging more than 800 points on a 1,000 point scale indicate they tend to increase business with the insurance company. In contrast, only 28 percent of agents with scores averaging 600 points or less indicate the same. So what makes for a satisfied agent? Interestingly J.D. Powers found that compensation is not the primary driver of agent satisfaction. “Insurers that provide helpful and knowledgeable business contacts and provide a variety of policy offerings help to better meet the needs of consumers, which leads to greater levels of satisfaction among agents,† said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates in a press release. The most important factors contributing to agent satisfaction are: key carrier contacts (32 percent); policy offering (23 percent); claims (16 percent); technology (13 percent); price (10 percent); and compensation (5 percent). The 2009 Insurance Agency Satisfaction Study is based on responses from 1,589 insurance agents evaluating more than 10 insurance companies across the industry. Check out I.I.I. information on evolving distribution channels.  

Top Insurance Complaints 2008

Delays (19.1 percent), denial of claims (18.4 percent) and unsatisfactory settlement offers (14.2 percent) were once again the top three reasons consumers filed formal complaints against their insurance companies in 2008, according to data just released by the National Association of Insurance Commissioners (NAIC). Premium/insurance rating issues (4.7 percent) and policy cancellations (4.0 percent) rounded out the top five, regulators said. By type of coverage, the top three complaints in 2008 were: accident & health (36.9 percent); auto (36.7 percent); and homeowners (11.8 percent). The good news is that the total number of complaints declined for the fifth consecutive year in 2008. A total of 195,669 confirmed consumer complaints on insurers were reported via the NAIC’s Complaint Database System (CDS) in the 2008 calendar year. States voluntarily report “closed† complaints via the CDS. A closed complaint is a complaint that has been investigated and resolved to the satisfaction of the state or jurisdiction in which it is filed.  Ã‚  

P/C Customer Satisfaction Remains High

Even as the economy weakened, customer satisfaction with the property/casualty insurance industry remained high in the fourth quarter of 2008, improving over 2007 levels. The latest University of Michigan American Customer Satisfaction Index reveals that the p/c sector saw a 1.3 percent gain to record a score of 81 in Q4 2008. In the aggregate, customer satisfaction with the finance and insurance sector improved 0.7 percent to 76, erasing a corresponding deficit from a year ago (see our February 20, 2008 posting). A gain in ACSI for health insurance (+2.8 percent to 73) and the more modest gain in p/c insurance more than offset a decline in satisfaction with banks (-3.8 percent to 75). Meanwhile, satisfaction with life insurance stayed the same. The finance and insurance sector includes commercial banks and property and life and health insurers, as well as credit unions, a new ASCI entrant. The index measures customer expectations, perceived quality and perceived value of companies in various industries.

Keys to Retaining Customers

A perennial issue for insurers is how to retain customers. A new study from J.D. Power and Associates says that identifying at-risk customers is critical for insurers in minimizing defection rates and increasing loyalty. The 2008 Insurance Retention/Defection Study found that although 85 percent of auto insurance customers indicate they are loyal to their carrier, more than one-third shopped for a new insurance provider. According to the study, some 15 percent of policyholders defected to another insurance carrier in 2008 and an additional 20 percent were at risk of leaving their current carrier. Among the 15 percent of customers who defected, only one-third intended to switch carriers when they first started to shop, suggesting that carriers have an opportunity to retain up to two-thirds of all defectors. However, only 30 percent of defectors report that their previous insurer made any attempt to keep their business. Not surprisingly, the study also found that price is a key driver among both defecting and loyal customers. But while offering competitive pricing and discounts is one way to persuade customers at risk of defecting, J.D. Power and Associates  says that educating them about their policies and providing thorough policy reviews on a regular basis are also key tactics in persuading them to stay on board.