Study: Good Property Claims Experiences Lead to Loyal Customers

Claimants of insurance companies that provide highly satisfying property claims experiences are considerably more likely to renew with their insurer and recommend their insurer to others, according to the J.D. Power and Associates 2010 U.S. Home Claims Satisfaction Study.

(Among home insurers that provide highly satisfying claims experiences (satisfaction scores of 840 or higher on a 1,000-point scale), 71 percent of their claimants indicate that they “definitely will” renew with their insurer and only 4 percent say that they have switched insurers since experiencing their homeowners claim. Similarly, 67 percent of these claimants say they “definitely will” recommend their insurer to others.

In comparison, among insurance companies with lower levels of satisfaction, only 53 percent of claimants say they plan to renew, while 10 percent say that they have switched insurers. Fewer than one-half (48 percent) of these claimants say they “definitely will” recommend their insurer.

“Suffering a property loss and filing a claim tends to be an emotionally charged experience — often more so than an auto claim,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “As a result, the property claim represents a moment of truth for insurance claimants regarding their insurers, so it’s particularly important that the claims experience is handled in a satisfying manner to ensure claimants remain with the insurer in the long run.”

The study finds that insurers performing key service practices — such as clearly explaining the claims process, giving claimants an expectation of how long the claim will take and ensuring claimants know who to contact with questions — may considerably improve satisfaction with the claims experience. Among claimants who say that their insurer delivered on all of the top service practices, satisfaction averages 929 points. In comparison, satisfaction drops to 650 among claimants whose insurers missed four or more of the top service practices.

“Delivering on key service practices is crucial to providing a satisfying claims experience, but only 17 percent of home insurance claimants say their insurer delivered on all 10 practices,” Bowler said. “The home claims process tends to be extremely complex, with an almost infinite variety of homes in the country that vary in terms of architectural styles, age, materials, building codes, etc. All of this makes standardizing the claim handling process more difficult. However, every insurer may reap benefits by driving greater consistency in customer handling, particularly in terms of education, empathy and service convenience.”

Amica Mutual, Auto-Owners Insurance and USAA perform particularly well among insurers in providing claimants with a satisfying property claims experience, according to the study.

The study results also include the following trends:

• Insurance customers in rural areas more often say that their insurer delivered on key performance indicators, compared with those in urban areas, despite usually having fewer options during the repair process.
• While claimants in the South tend to be just as satisfied with their insurers overall, on average, than those elsewhere in the United States, they tend to be significantly less satisfied with their property claims experiences.
• Insurance claimants older than 54 indicate having received all of the top service practices more often than younger claimants –and are more satisfied overall.
• Claimants — particularly those under 35 years — prefer electronic communications (online and e-mail) when receiving updates regarding the claims process.

The 2010 U.S. Home Claims Satisfaction Study measures insurance customer satisfaction with the property claims experience by examining five factors: settlement; first notice of loss; appraisal; service interaction; and repair process. The study is based on surveys from nearly 3,000 insurance customers nationally who filed a property claim between November 2008 and April 2010 and evaluates 13 insurance companies, including: Allstate, American Family, Amica Mutual, Auto-Owners Insurance, Erie Insurance, Farmers, Liberty Mutual, Nationwide, Safeco, State Farm, The Hartford, Travelers and USAA. The study was fielded in April 2010.