Fewer Catastrophes Drives Higher Insurance Claims Satisfaction – J.D. Power Study

With fewer CATs to handle, insurers are able to apply lessons learned to property insurance claims—and are likely to reap a customer retention dividend as a result.

(Fewer severe storms have allowed insurers to focus on claim service. Photo credit: John Kerstholt.)

While recent research has found growing deficits in customer experience overall, claims satisfaction in particular has risen for the third consecutive year, according to J.D. Power’s 2015 Property Claims Satisfaction Study. The Westlake, Calif.-based market researcher interprets the continued increase in part as a reflection of carriers’ ability to focus on non-catastrophic claim service during a time of fewer catastrophic storms.

Jeremy Bowler, Senior Director, Insurance, J.D. Power.

Jeremy Bowler, Senior Director, Insurance, J.D. Power.

J.D. Power’s annual study measures insurance customer claim satisfaction based on five factors:

  • Settlement;
  • First notice of loss;
  • Estimation process;
  • Service interaction; and
  • Repair process

“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,” comments Jeremy Bowler, senior director of J.D. Power’s insurance practice. “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.”

Insurers’ claims operations have contended with a record 25 catastrophe loss events in 2011 and 2012 combined, a J.D. Power statement notes. Carriers have welcomed the comparatively quiet period since, with eight events in 2013 and only five in 2014 within the primary fielding period of the 2015 study. By applying the lessons learned while handling CAT claims to non-CAT claims and by putting renewed focus on their property insurance business, insurers have been able to increase property claims satisfaction to 851 (on a 1,000 point scale) in 2015, up from 840 in 2014, according to the researcher.

The lull in the incidence of catastrophic storms has enabled insurers to shift their attention and resources from auto insurance claims to property, Bowler adds. “They are getting serious about applying the knowledge from their auto business to property claims, and we’re seeing that reflected in higher customer satisfaction,” said Bowler.

Customer Retention Dividend

Getting claim service right is more important than ever in an era during which insurance is seen as a commodity. While a claim has always been a “moment of truth” in the insurer/customer relationship, it should be seen as a customer retention opportunity where insurers can realize a return on their customer service investment, according to J.D. Power. The researcher reports that 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. By contrast, 9 percent of indifferent (scores 550-749) and 11 percent of displeased (scores 549 or lower) customers have switched to a different insurer. Additionally, 23 percent of indifferent customers and 42 percent of displeased customers say they “will shop” for a new provider during the next 12 months.

J.D. Power shares the following key findings from the 2015 Property Claims Satisfaction Study:

  • Overall satisfaction improves in each of the five factors in 2015, with the greatest year-over-year improvements in settlement and service interaction.
  • Satisfaction is highest when the insurance agent is the primary contact throughout the claims process (865) and lowest when the primary contact is the claims professional (793). The percentage of customers who say their agent is their primary contact has increased to 24 percent in 2015 from 18 percent in 2014. Only 7 percent of customers say the claims professional is their primary contact in 2015, down from 9 percent in 2014.
  • The majority (90%) of full-service advice seekers—customers who value a personal relationship with their agent—contact their agent to report the first notice of loss and receive the majority of claims updates through phone calls (71%). On the other end of the spectrum are technologists—customers who opt to interact with their insurer through digital channels—who most often contact a call center or use their insurer’s website to begin their claims process and receive updates online or via email or texts.
  • Claims satisfaction is highest among Pre-Boomers (880) and is lowest among Gen Y (839) customers. Satisfaction among Boomers is 850 and 849 among Gen X customers.

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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