In the wake of the extensive natural catastrophic losses which have occurred throughout the United States in the first half of 2011, J.D. Power and Associates decided to conduct a study to examine how the communication practices of insurance providers factors in customer satisfaction throughout the entire claims process. The Property Claims Satisfaction study measured insurance customer satisfaction with the property claims experience by examining five factors:
- First Notice of Loss
- Service Interaction
- Repair Process
“With national property claims severity estimated to exceed $15 billion for April and May 2011 alone, some carriers are finding it extremely difficult to fully meet claimants’ requests under such financial and resource strains,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “As a result, it’s crucial for carriers to focus on effective communication and thorough explanations to ensure their claimants are as satisfied as possible during a potentially emotional claims process.”
Here’s what the study found:
- Auto-Owners Insurance, The Hartford and USAA did particularly well among insurers dealing with claimants during a property claims experience;
- A positive claims experience fosters higher long-term loyalty among claimants, while a negative claims experience may make claimants more likely to switch insurers.;
- Insurance claimants are more satisfied when their insurer uses key communication practices, for example:
- Satisfaction averages 828 on a 1000-point scale when claimants with losses spoke with only two representatives during the claims process;
- Satisfaction declines to 684 among claimants who had to speak to four or more representatives;
- Claimants who get a clear explanation of the claims process and a timetable for navigating the claims process are much more satisfied than claimants who had no idea of the time-table or the process;
- Approximately one-third of claims include the loss of contents. These claims generally tended to be more complicated and high-emotional events resulting in a less-satisfying experience versus those claims which did not involve content loss;
- Overall, nearly one-fourth of claimants negotiated the settlement amount with their insurer, most often regarding the amount of damage to be covered (50% of the time), additional living expenses (41%), materials used in the repair (28%) and/or personal items (16%). When settlement negotiations occur, claimants are more likely to consider switching insurers in the next 12 months.
- While 21 percent of auto claimants report paying out-of-pocket expenses in addition to their deductible, nearly 40 percent of home claimants with a content loss claim report paying out-of-pocket costs during the claims process. Another one-fourth of home claimants who suffer a content loss are ultimately reimbursed for their out-of-pocket expenses. Satisfaction declines considerably when expenses they paid are not ultimately reimbursed;
- Holdbacks or depreciation are two common causes for claimant-incurred expenses. When these expenses are later reimbursed, the claimant is negatively affected as a result of the loss mitigation practices;
The 2011 Property Claims Study was fielded in April of this year and is based on surveys from nearly 3,000 insurance customers nationally who filed a property claim between November 2009 and April 2011. The Study also evaluated 13 insurance companies including: Allstate, American Family, Auto-Owners Insurance, Erie Insurance, Farmers, Liberty Mutual, MetLife, Nationwide, Safeco, State Farm, The Hartford, Travelers and USAA.
In June of this year, J.D. Power and Associates also conducted a 2011 Insurance Shoppers Study which found a majority of new auto insurance buyers now initiate their policy purchase by applying for a rate quote online.