In tough economic times thereÃ¢â‚¬â„¢s always a concern that cost-efficiencies may come at the expense of a companyÃ¢â‚¬â„¢s customers and employees. A new Web-based survey of claim officers by Towers Perrin conducted immediately prior to the global financial crisis appears to underscore insurersÃ¢â‚¬â„¢ focus on strategic, growth-related actions Ã¢â‚¬“ including the retention of key talent and expansion into new product or service lines Ã¢â‚¬“ rather than across-the-board staffing cuts. According to its findings, claim officer respondents identified roles such as frontline technical resources (64 percent) and middle management personnel (51 percent) as among the most difficult to staff over the next three to five years. In filling vacant positions, claim officers look for different skills and competencies Ã¢â‚¬“ problem solving (58 percent) was seen as the top core claim operations skill for those conducting adjusting operations. In contrast, the top skill for call center operators was soft people skills (92 percent). When it comes to retaining their current employees, claim respondents said it is the mix of pay, work/life balance and career advancement/growth opportunities that will keep those employees on board. As for recruiting top-notch candidates, nearly 70 percent said employee referrals are the most effective way to secure top talent. Check out I.I.I. stats on insurance careers and employment.Ã‚
The gap in customer satisfaction between homeowners and auto insurance providers has steadily widened during the past five years. The J.D. Power and Associates 2008 Homeowners Insurance Study reports that satisfaction with auto insurers has increased to an average score of 787 on a 1,000 point scale in 2008 up 25 points from 2004. Meanwhile, customer satisfaction with homeowners insurance during the past five years has basicallyÃ‚ held steady, with a score of 752 in 2008, down one point from 753 in 2004. The study measures customer satisfaction by examining five key factors: policy offerings; price; billing and payment; interaction; and claims. In particular, satisfaction with pricing has driven the steady improvement in satisfaction with auto insurance providers. While claims and pricing factors were key factors in the lack of improvement in customer satisfaction with homeowners insurance, some improvements were noted in policy offerings. Some key practices appreciated by customers? Bundling Ã¢â‚¬“ satisfaction levels are particularly high among policyholders who bundle multiple policies with their homeowners insurer. Annual policy reviews also raised satisfaction and nearly 50 percent of homeowners policyholders report being offered one. Check out I.I.I. tips onÃ‚ homeowners and auto insurance.Ã‚
While weÃ¢â‚¬â„¢re on the topic of risk management, insurers attending this weekÃ¢â‚¬â„¢s RIMS conference might want to stop by the Willis booth to check out a demo of the brokerÃ¢â‚¬â„¢s new carrier benchmarking tool, the Willis Quality Index. The tool will rate and compare carriers on their performance in underwriting, policy administration, claims performance and service activities. Last June the findings of the inaugural carrier survey from Willis (see our June 22, 2007 posting) indicated that insurers needed to do more to differentiate themselves through service and performance. The latest Spring 2008 survey found evidence that carriers across all parts of the business had scored, on average, better than in their last survey.Ã‚ Ã‚
Meanwhile, RIMS and Advisen Ltd have released the Broker Services and Remuneration Study. This study finds that insurance buyers are driving brokers to change their service offerings and the way brokers are compensated. Buyers were surveyed on how their brokers are compensated, how much their brokers receive for their services and what types of services their brokers provide. For the industryÃ¢â‚¬â„¢s largest programs, buyers are spending the majority of their broker money on fees instead of commissions, the study reports. It goes on to quantify the differences in average costs to insurance buyers of fee-based broker remuneration, as opposed to traditional commission-based remuneration.
As the annual legislative session gets underway tomorrow in Tallahassee, Florida, the availability and affordability of coastal property insurance continues to be a hot-button issue. So itÃ¢â‚¬â„¢s appropriate we check in with the latest poll of Florida voters for their take on the issue. The statewide poll, by the Property Casualty Insurers of America (PCI), surveyed and analyzed the views of 800 likely voters in the sunshine state. Its key findings:Ã‚
- Homeowners insurance ranked as the No. 2 overall priority among Floridians after property taxesÃ‚
- 91 percent agree that the state should focus on helping reduce losses through better storm-proofing, such as controlling how and where homes are builtÃ‚
- 75 percent of Floridians believe that the Legislature has not delivered on their promises to reduce the cost of homeowners insuranceÃ‚
- 75 percent of Floridians believe that the long-term stabilization of rates is more important than immediate rate relief
Customer satisfaction with the property/casualty insurance industry reached its highest level in over a decade in the fourth quarter of 2007. According to the latest University of Michigan American Customer Satisfaction Index, the p/c sector improved 2.6 percent to record a score of 80. However, in the aggregate, customer satisfaction with the finance and insurance sector dropped 0.7 percent to 75.5, a retreat from the gains of the previous year that had put the sector at its highest level since 1994 (see our Feb 22, 2007 posting). The sector includes commercial banks and property and life and health insurance. Amid rising health care costs, customer satisfaction with health insurers also slipped 1.4 percent. The index measures customer expectations, perceived quality and perceived value of companies in various industries.Ã‚
The National Association of Insurance Commissioners (NAIC) has just released its top insurance complaints for 2007. Given the mediaÃ¢â‚¬â„¢s tendency to focus on the negative, we shouldnÃ¢â‚¬â„¢t overlook the fact that consumer complaints against insurers declined for the fourth consecutive year by 3.6 percent to 222,814 in 2007. Delays (16 percent), denial of claims (14.7 percent) and unsatisfactory settlement offers (9.8 percent) were the top three reasons consumers filed formal complaints against their carriers during the course of the year. Policy cancellations (4.6 percent) and premium/insurance rating issues (4.4 percent) rounded out the top five, the regulators noted. Meanwhile, accident & health (36.4 percent), auto (34.4 percent) and homeowners (12.5 percent) were the top three complaints by type of coverage in 2007. It would be remiss of us not to mention that the NAIC collected the data via its centralized electronic Complaint Database System (CDS), through which states voluntarily report Ã¢â‚¬Å“closedÃ¢â‚¬ complaints. A closed complaint is one that has been investigated and resolved to the satisfaction of the state or jurisdiction in which it is filed.Ã‚
Just how important a role the Internet will play in the sale of insurance in coming years is a question that elicits a range of viewpoints. The latest World Insurance Report from consulting group CapGemini and the European Financial Management & Marketing Association (EFMA) signals a startling shift in Internet usage among customers. According to its findings, in mature markets such as North America and Western Europe, some 28 percent of customers said they intended to buy their life insurance policies online in three years, while 34 percent said they would buy non-life policies online. The report suggests the rise of the Internet will clearly put some existing distribution networks at risk. Insurers prepared to embrace and leverage these changes and to adopt a structured multi-distribution strategy could benefit from significant growth opportunities, it says. Check out online insuranceÃ‚ sales facts & stats from the I.I.I.
During the course of this year, weÃ¢â‚¬â„¢ve posted a number of items about the importance of claims handling and service in our industry. As we look ahead to 2008, thereÃ¢â‚¬â„¢s no doubt that these two factors will continue to have a major influence on insurance customer satisfaction. A new report from J.D. Power and Associates is the latest to substantiate this view. It reveals that the time it takes to repair the damage to property or vehicles has a major impact on the satisfaction of homeowners and auto insurance claimants. For example, among the two-thirds of customers whose vehicles are fixed and returned within 14 days, satisfaction averages 843 on a 1,000-point scale. But that satisfaction declines by 71 points among the 36 percent of customers who must wait longer than two weeks for their vehicle to be repaired. Homeowners claimants are similarly impacted when repairs take longer than initially expected, J.D. Power reports. It goes on to say that managing customer expectations is a crucial part of the claims process. Something to keep in mind as we go into 2008.
FYI this is our last posting of the year. Thanks for reading and join us January 2 for more commentary on the industry.Ã‚
Insurers increasingly use multiple distribution channels to sell their products, so an annual best practices study just released by the Independent Insurance Agents & Brokers of America (IIABA) is worth reading. The 2007 study shows that overall agencies are doing much more with fewer people and show an organic growth rate that is much stronger than expected. The new crop of best practices agencies were asked to what they attributed their success and overwhelmingly, regardless of agency size, they noted Ã¢â‚¬Å“the quality of our people.Ã¢â‚¬ According to IIABA, this quality is defined as a strong work ethic, expert knowledge in agency products and services, as well as high ethical standards and dedication. These factors along with advanced proficiencies with agency technologies allowed the 2007 Best Practices Agencies to push productivity levels higher than ever. The 2007 study names 195 new agencies in six agency revenue categories ranging from under $1.25 million to over $25 million. It includes a new statistic, known as the Ã¢â‚¬Å“Rule of 20Ã¢â‚¬ , which provides a quick means of calculating whether or not an agency creates value for its shareholders. The leading agencies must be nominated for participation in the study. Check out further I.I.I. info on distribution.Ã‚
In our July 17 posting, we blogged about how take-up rates for certain insurance coverages remain low, even as the risks increase. The floods across the Midwest bring this issue to the fore once again. Flood insurance is an optional coverage, available under an insurance policy provided by the National Flood Insurance Program (NFIP). ItÃ¢â‚¬â„¢s easy to buy either viaÃ‚ an insurance agent or insurance company rep. Yet, itÃ¢â‚¬â„¢s estimated that just 49 percent of homeowners in U.S. flood zones purchase NFIP policies, and only 1 percent of homeowners outside flood zones have flood insurance.Ã‚ A policy with the NFIP can run as little as $112 a year, if you live in a low to moderate risk area and are eligible for a Preferred Risk Policy. This would provide a minimum of $20,000 building and $8,000 contents coverage. Meanwhile, businessowners can buy $50,000 building and $50,000 contents coverage (per building) for only $500 per year. As to the risk, some 90 percent of natural disasters in the U.S. involve some type of flooding and according to the Federal Emergency Management Agency (FEMA), floods, including inland flooding, flash floods and seasonal storms, occur in every region of the U.S. Check out further I.I.I. flood insurance facts & stats.