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).
Highest-ranked insurance companies
Amica Mutual ranks highest in overall satisfaction with the property insurance claims experience for a fifth consecutive year, achieving a score of 898. Amica Mutual performs particularly well in nearly all study factors. Auto Club of Southern California Insurance Group ranks second with a score of 879, followed by COUNTRY Financial, Encompass, and Erie Insurance, all scoring 863 in a tie.
USAA also achieves high levels of customer satisfaction, although the insurer is not included in the rankings due to the closed nature of its membership.
Safeco (857), State Farm (855) and Liberty Mutual (854) placed 6-8, followed by a tie between Nationwide and The Hanover (853) rounding out the top 10. The industry average score in the study was 846.
• Do these consumer rankings align with the personal experience of P&C agents? Please share your thoughts on this new thread: 5th consecutive year a company tops property claims satisfaction rankings
The 2016 Property Claims Satisfaction Study is based on more than 5,700 responses from homeowners insurance customers who filed a property claim between January 2014 and December 2015.