Tag Archives: Customer Satisfaction

Auto Insurance Claims Satisfaction at a Record High During Pandemic

Auto insurers used the decline in auto damage claims during the COVID-19 pandemic as an opportunity to refine their claims processes, and customers have noticed.

According to the J.D. Power 2020 U.S. Auto Claims Satisfaction Study, the customer services improvements have led to  record-high  customer satisfaction. These improvements include ensuring that representatives are always immediately available; completing work when promised; and providing multiple services at first notice of loss.

“It is extremely rewarding to see the insurance industry’s exceptional work being recognized by its most important critic: the American consumer,” said Sean Kevelighan, CEO, Triple-I.  “During the pandemic, the nation’s auto insurers have worked non-stop to provide relief and economic security to policyholders who had to file a claim.  This is in keeping with their role as society’s financial first responders,” he said in a Triple-I news release.

Key findings of the J.D. Power study include:

  • Record-high customer satisfaction with auto claims: Overall satisfaction with the auto insurance claims process increases to a record-high 872 (on a 1,000-point scale), up four points from 2019. This is the third consecutive year of improvement in auto claims satisfaction, which has been driven by increases in performance across nearly every factor measured in the study: claim servicing; estimation process; repair process; rental experience; and settlement. The only factor that has not improved year over year is first notice of loss, which remains flat from 2019.
     
  • Cycle time improves as claims volume slows: Auto insurers have upped their game during the pandemic, taking advantage of the drop in frequency to increase the speed of processing for claimants. Overall cycle time for claimants with reparable vehicles has improved to just 10.3 days during the pandemic, down from the pre-virus average of 12.6 days.
     
  • Quantifying the COVID-19 boost: This year’s study was fielded in four waves from November 2019 through September 2020, giving J.D. Power the ability to compare pre-virus levels of customer satisfaction with those experienced during the pandemic. Notably, the number of claimants who say they “definitely will” renew with their existing insurer is 76% during the pandemic versus 72% pre-virus. 
  • Use of direct repair program (DRP) shops improves satisfaction: The industry’s growing use of directly affiliated repair shops is paying off with a significantly higher overall satisfaction score (888) than for independent repair shops (844). This is driven by quicker cycle times among DRP shops and regular updates on progress.

“The sharp decline in claims volume during the pandemic has served as a test case for the industry in how to make improvements in service delivery that translates directly to increased satisfaction and increased intent to renew,” said Tom Super, head of property and casualty insurance intelligence at J.D. Power. “This is important because it demonstrates that efforts to improve claimant service delivery translates directly to improved business outcomes. The challenge now, of course, will be maintaining that high level of service as claims volumes start to normalize.”

Given the reduced mileage on U.S. roadways this year, U.S. auto insurers are also returning over $14 billion to their customers nationwide in response to reduced driving during the pandemic, according to a Triple-I estimate.

What motivates people to shop for auto insurance? A study conducted by Facebook and comScore

To discover what motivates people to shop for auto insurance in the U.S., Facebook and comScore teamed up to survey 1,010 U.S. adults who had purchased a car in the last 6 months. Our guest blogger, Brad Auerbach, provides key insights from the survey, which we think will help insurance producers and marketers target potential customers.

By Brad Auerbach, Head of Industry, Facebook

Mobile devices are facilitating consumer research

Smartphones and other mobile devices clearly play a major role in how customers research their insurance options. Thirty-nine percent of survey respondents reported being heavy mobile users, and 64 percent said that they have previously used a smart phone to shop for auto insurance.

But it appears that most customers aren’t using mobile to buy insurance online. Sixty-one percent of respondents reported that they believed research to be important before selecting their provider, but less than half reported that they actually purchased auto insurance online. Of the respondents who purchased offline, 45 percent said they purchased through an agent and 10 percent through a call center.

Key takeaway: The relative lack of online sales activity may be an indication that auto insurers need to improve their online purchasing experience, such as providing a faster and more streamlined design and experience for their users. Note that survey respondents pointed to a good website (25 percent) and mobile app (15 percent) as potential reasons for why they chose their auto insurance provider.

Consumers don’t shop around for very long

Thirty percent of respondents reported that they selected their provider within a single day, and 60 percent said that their shopping window lasted less than one week.

Advertising is one way that affects which insurance provider consumers choose. Almost half (49 percent) of respondents who recalled seeing or hearing auto insurance ads reported that the ads helped them discover new insurance brands. Forty-four percent agreed that encountering ads motivated them to consider an insurance provider that they hadn’t previously considered.

Key takeaway: Insurance producers and marketers should be prepared for consumers to make quick decisions once they’ve found an auto insurance provider that meets their needs.

The 4 major types of buyers and their motivations

We identified 4 major buyer-types in our survey. They included:

Millennials

33 percent of respondents

Millennials are actively seeking out others’ opinions before buying auto insurance. They’re more likely to be motivated by price. Important triggers for them to begin shopping for insurance include life events, such as buying a new car or moving to a new location.

Loyalists

55 percent of respondents

Loyalists are loyalists for a reason.  They are less likely to do deep research, but instead may place a high emphasis on customer service. Their triggers include contract renewals (51 percent), followed by a new car purchase (34 percent).

Switchers

37 percent of respondents

Switchers are motivated by pricing above all else. They’re receptive to advertising and they’re likely to research multiple channels such as friends and family, insurance company websites, social media, etc., to ensure that they’re getting the best deal.

Heavy mobile users

39 percent of respondents

The heavy mobile user intuitively turns to their mobile platforms to conduct their auto insurance research. As expected, they tend to be younger, with lower incomes and credit scores. Their triggers include a recent car purchase (41 percent) and the desire for lower pricing (39 percent). 44 percent also reported that they’ve switched auto insurance providers in the past.

Conclusion
Auto insurance producers and marketers can improve their sales performance by understanding who their customers are, including their motivations and how they’re using technology to buy auto insurance.

For more insights on the path to purchasing auto insurance, download the full report.

 

Brad Auerbach is the Head of Industry at Facebook, where he is focused on leading the operational excellence, revenue growth and strategic partnerships with the largest U.S. financial services and insurance companies. Brad’s team consults with marketers to empower mobile connections that drive business results. Brad is a regular speaker at the McKinsey Property & Casualty Leaders Forum, TransUnion Digital Disruption Summit and Northwestern University’s Kellogg Marketing Conference. Brad attended Indiana University and lives in Chicago with his wife and their two children.

Auto Insurers engage in aggressive customer courtship as shopping stagnates

Auto insurers are contending with record-low numbers of new shoppers, price competition and the ever looming Insurtech disruptors. These conditions have forced auto insurers into “aggressive customer courtship mode”, according to the J.D. Power 2018 U.S. Insurance Shopping Study.

To court customers insurers are investing forcefully in improving the shopping process and in national advertising to build their brands.

“We’re entering an era of consumer-centric insurance that will likely be marked by a surge in new digital offerings and serious efforts by insurers to improve the auto insurance shopping experience,” said Tom Super, Director of the Property and Casualty Insurance Practice at J.D. Power. “Auto insurers looking to differentiate and win new customers are making big bets with digital—such as in personalization—that meet customers’ growing expectations for improved interactions.”

Highlights from the study include:

  • Delivering an omnichannel experience is critical as 45 percent of auto insurance shoppers use multiple channels when purchasing a policy.
  • Brand reputation is the top driver of consideration, but a strong value proposition remains essential in driving quote and close rates.
  • Insurtech customer awareness still low: Just 6 percent of prospective customers indicate being aware of at least one of the following companies: Lemonade, Metromile, Trov and Sure. Less than half of shoppers who are aware of a given provider would consider doing business with them in the future.
  • Directs are winning purchase experience battle:Overall satisfaction among shoppers who purchased insurance from companies that primarily sell directly to the customer is 846 (on a 1,000-point scale). This compares with a score of 842 among shoppers who purchased insurance from companies that primarily sell through independent agents and 834 among those who bought from insurers who primarily sell through exclusive agents.

 

The digitized customer claims journey – a roadmap to success

Competition for customers is fierce, so incumbent property/casualty (P/C) insurers must hustle to integrate digital technologies into their operations. Digitizing the claims experience holds great promise for the P/C industry both in terms of customer experience and cost savings.

McKinsey and Company has recently released a report about planning for a successful claims digitization process. The essential elements needed to digitize and transform claims include developing a new value proposition that sets a high-level aspiration (and getting managers to buy in) and pursuing an end-to-end digitization of the claims customer journey.

A truly innovative customer journey can be achieved by integrating with three other areas—AI and digital technologies, the digital integration of the claims ecosystem, and a new digital operating model.

The figure below shows what an aspirational future state of a customer journey would look like, and the digital assets needed to achieve that state.

How To Keep Commercial Insurance Customers Satisfied

A survey of more than 1,400 risk professionals at large organizations in the U.S. or Canada that have purchased a commercial insurance policy from one of the profiled insurers or brokers throws up some interesting results.

It finds that as rates across the U.S. commercial property/casualty insurance market continue to decline, the key variables in driving overall commercial insurance customer satisfaction are insurer profitability and broker expertise.

The J.D. Power study, conducted in conjunction with RIMS (the risk management society), found a distinct correlation between customer satisfaction and insurer profitability, as measured by total commercial combined financial ratios.

Among large commercial insurers, the highest performing companies in overall satisfaction—XL Catlin (773 on a 1,000-point scale); CNA (767); and Chubb (765)—are also found to have some of the strongest combined ratios in the industry.

This suggests that the most profitable insurers are able to support more flexible underwriting standards to meet customer needs more effectively, according to J.D. Power.

The study found an overall correlation between customer satisfaction and insurer profitability of 0.67, suggesting the more profitable the book of business an insurer has, the greater the likelihood the insurer will also have high levels of satisfaction.

Among commercial insurance brokers, the most significant single attribute driving that performance is quality of advice/guidance provided, with the highest-performing firms, Lockton (863) and Arthur J. Gallagher & Co. (823), outperforming larger rivals by a large margin.

This demonstrates that brokers with in-depth expertise and who have a hands-on, consultative relationship with their clients are consistently driving the highest levels of customer satisfaction, J.D. Power says.

The inverse also appears to be true, as the study shows customer satisfaction declines by an average of 136 points among the 20 percent of customers who indicate their broker does not completely understand their business needs.

Industry-wide, brokers received an average rating of 8.34 on a 10-point scale for the quality of advice/guidance provided metric.

In addition to quality of advice/guidance, satisfaction with brokers was based on the following attributes: reasonableness of fees; ease of the renewal process; effectiveness of risk control services; variety of program offerings; effectiveness of program review; price, given services received; billing and payment process; and claims process.

Satisfaction with commercial insurers is based on five factors: service interaction; program offerings; price; billing process; and claims.

Organizations included in the J.D. Power 2016 Large Commercial Insurance Study have at least $100 million in annual revenue or operating budget.

The Insurance Information Institute provides some useful facts and statistics on the commercial insurance market here.

Spreading Awareness of Insurance to Small Businesses

A couple of new studies appear to shed light on the continuing need to communicate the importance of insurance for small business owners.

First, a Nationwide-sponsored survey found that 66 percent of small businesses do not have business interruption insurance (hat tip to Insurance Journal for its report here). This is despite the fact that an estimated 25 percent of businesses do not reopen following a major disaster.

Most small business owners are at risk of disaster, Nationwide noted. Some 75 percent of small businesses do not have a disaster recovery plan in place, even while 52 percent say it would take at least three months to recover from disaster.

Nationwide commissioned the survey from Harris Interactive, which polled 500 U.S. small business owners with fewer than 300 employees from June 8-19, 2015.

In a press release, Mark Pizzi, president and chief operating officer of Nationwide Direct and Member Solutions, said:

Small businesses are least likely to have disaster recovery insurance. And yet they are the ones most affected by a disaster. That’s why it’s essential for small businesses to have a disaster recovery plan.”

Meanwhile, a J.D. Power study found that many small business owners are unaware that insurers even provide commercial insurance.

Less than one-fourth of small business owners said they were aware that nine of the 17 insurance providers included in the study offer insurance for business customers.

Only six insurers had awareness rates above 40 percent for their commercial insurance offerings, and five of these are among the largest personal lines insurers, J.D. Power said.

While advertising is important to spread brand awareness, the study suggested that commercial insurers have better success when they develop awareness through agents/brokers, trade groups and word of mouth from other businesses.

The proportion of customers who considered/shopped an insurer among all potential prospects is 61 percent when awareness comes from an agent/broker or trade group, compared with just 38 percent when awareness is attributed solely to advertising.

Still, the study–now in its third year–found that small business customers are increasingly satisfied with their insurance providers. Overall satisfaction was up 10 points at 793 on a 1,000-point scale in 2015, due primarily to improvements in price and policy offerings.

The 2015 U.S. Small Business Commercial Insurance study is based on 3,292 responses from insurance decision-makers in businesses with 50 or fewer employees that purchase general liability and/or property insurance and was fielded from April through June 2015.

The Insurance Information Institute’s excellent online resource for business insurance is available here.

Millennials Are Happy With Their Auto Insurance

Gen Y customers—or Millennials—have expressed a sharp increase in satisfaction with their car insurance compared to other generations, according to the just-released J.D. Power 2015 U.S. Auto Insurance Study.

The study examines customer satisfaction in five factors: interaction; price; policy offerings; billing and payment; and claims.

Overall customer satisfaction with their auto insurer reached an all-time high of 818 on a 1,000-point scale, an improvement of 8 index points from 2014.

Satisfaction among Gen Y customers increased by 21 points–the biggest increase compared with the other generations. Satisfaction among Gen X customers was up 6 points, and among Boomers by 4 points, while Pre-Boomers were less satisfied (-3 points).

Improved interactions had the greatest impact on overall customer satisfaction and were also the largest contributor to the year-over-year improvement, the JD Power survey found.

Interaction satisfaction among Gen Y customers came in at 827, an increase of 20 points from 2014.

Customer interaction preferences are changing. Gen Y’s preference to interact exclusively via digital self-service (Web or mobile) increased to 27 percent in 2015, up from 21 percent in 2011.

A similar preference to interact via Web or mobile is true of other generations: Gen X (23 percent vs. 19 percent in 2011); Boomers (12 percent vs. 10 percent); and Pre-Boomers (6 percent vs. 4 percent).

However, auto insurers need to have their websites ready to resolve customer service issues.

The survey found that among the interaction channels, satisfaction with the website experience receives the lowest average score, most notably among Gen Y customers (816, compared with 826 for Gen X, 841 for Boomers and 861 for Pre-Boomers).

JD Power noted that while customers across all generations are able to use online self-service for basic tasks such as making a payment and gathering information about their account, they also need to be able to resolve more complex issues online.

Still, some activities are better performed through personal interactions, J.D. Power noted.

For example, when it comes to discussing price changes, one-quarter (25 percent) of Gen Y customers would rather talk to someone in person or over the phone, and 23 percent indicate they prefer in person or over the phone rather than the website channel when they have questions about their policy coverage.

The Insurance Information Institute (I.I.I.) has some  must-read facts and statistics on auto insurance here.

Price Optimization: What it is and what it isn’t

I.I.I. Florida representative Lynne McChristian sheds light on the topic of price optimization in this post which  first appeared @InsuringFLA blog.

Florida regulators issued a memorandum to insurers recently to eliminate the use of something called price optimization. That’s probably an unfamiliar term to most people. It’s interesting that the memo had to define what “price optimization” is in order for insurers to stop doing it. Simply, the memo from the Florida Office of Insurance Regulation was to stop a practice that few insurers are using in the first place and that may actually help lower insurance costs.

Price optimization is a tool that other industries have used for years, specifically the retail and travel industries. It is a new tool for insurers, and it’s one that is designed to add sophisticated computer analysis to the final polishing of insurance prices.

At the very end of setting rates, insurers have always adjusted prices, almost always slightly lower, to reflect the industry’s competitive nature. It used to be a seat-of-the-pants guess by a real, live actuary; now, a computer helps give the final nudge.

That takes human guesswork out of it, yet the computer does the same thing.

Some critics have turned this equation upside down, stating instead that an insurance company is looking only to increase profits. Florida is one of four states that is prohibiting the practice of price optimization before there is a clear understanding of its consumer benefits. Most other states are carefully studying the practice and awaiting a white paper being developed by a special task force established by the National Association of Insurance Commissioners.

Insurers use all types of data to establish individual insurance rates. The concern critics have about price optimization is that it is not based on commonly used risk factors for auto insurance. Price optimization gave insurers one more tool to employ more sophisticated computer algorithms to give better prices to consumers. But that won’t be the case for Floridians.

Everyone cares about what they pay for insurance, and there are lots of choices for those shopping for auto insurance. So, if you think you’re not getting the best price, use these tips to shop around for auto insurance. To learn more, check out this Q&A on price optimization.

Homeowners More Satisfied Than Ever With Property Claims Experience

Overall satisfaction among homeowners who have filed a property insurance claim increased for the third consecutive year, according to the JD Power 2015 Property Claims Satisfaction Study.

Insurers have been able to increase property claims satisfaction to 851 (on a 1,000 point scale) in 2015, up from 840 in 2014.

JD Power said the higher satisfaction among customers reflected the fact that insurers have applied the lessons learned while handling CAT claims to non-CAT claims and put renewed focus on their property insurance business.

In the words of Jeremy Bowler, senior director of the insurance practice at JD Power:

The study shows the significant gains insurers have made in customer satisfaction by applying the lessons learned while handling prior catastrophic losses to all claim processes.

The big storms masked the steady progress the industry has also been making in recent years on routine claims, but we’re really seeing that shine now.”

The study, now in its eighth year, measures satisfaction with the property claims experience among insurance customers who have filed a claim for damages by examining five factors: settlement; first notice of loss; estimation process; service interaction; and repair process.

Overall satisfaction improved in each of the five factors in 2015, with greatest year-over-year improvements seen in settlement and service interaction, JD Power noted.

The study findings are good news for insurers as they often realize a return on their investment in customer satisfaction in the form of loyalty.

Only 3 percent of customers who were delighted (satisfaction scores 900 or higher) and 7 percent of those who were pleased (scores 750-899) with their insurer during the claims process have switched carriers since their claim closed, according to JD Power.

But, 9 percent of indifferent (scores 550-749) and 11 percent of displeased (scores 549 or lower) customers have switched to a different insurer. And 23 percent of indifferent customers and 42 percent of displeased customers say they will shop for a new provider during the next 12 months.

The study is based on more than 6,100 responses from homeowners insurance customers who filed a property claim between January 2013 and December 2014.

Check out this I.I.I. video for steps for filing a homeowners claim.

Higher Satisfaction With Auto Insurance Claims Process

Despite an increase in the number of more complex physical damage claims, auto insurers are doing a better job of handling these types of claims.

The just-released J.D. Power 2014 U.S. Auto Claims Satisfaction Study finds that overall customer satisfaction with the auto insurance claims process has improved steadily during the past five years to 857 on a 1,000-point scale in 2014, up from 842 in 2010.

What’s more, customer satisfaction with more complex claims — those in which vehicles have significant structural damage and need to be towed — has also increased.

Satisfaction with total loss claims in 2014 averages 829, while satisfaction for towed vehicle claims averages 851. Satisfaction with each claim type was up 12 points from 2013.

J.D. Power notes:

Those improvements in satisfaction with insurers’ handling of complex claims are largely due to insurers managing customer expectations with respect to the timing of the claim and moving the claim along more quickly–key metrics of communicating the settlement, repair time, and paying the customer (if applicable) are all performed faster in 2014.”

The fact that customer satisfaction continues to rise is even more noteworthy when you consider that auto insurers are handling a growing number of more complex claims.

Total loss claims and claims in which vehicles have significant structural damage and need to be towed accounted for 37 percent of all auto claims in 2014, up 5 percentage points from 2011 when complex claims accounted for 32 percent of the total.

However, the study finds the rise in more complex claims has pushed up the average severity of claims (based on the dollar amount of loss) for the third consecutive year.

Check out I.I.I. facts and statistics on auto insurance.