J.D. Power: Technology Can’t Replace Human Element in Auto Claims Process

Gen Y customer satisfaction with the auto insurance process, while still the lowest among all generations, is improving and carrying the rest of the industry with it, according to the J.D. Power 2016 U.S. Auto Claims Satisfaction Study, released today.

Overall satisfaction among Gen Y averages 844 on a 1,000-point scale in 2016, up from 827 in 2015. The 17-point increase among Gen Y customers helps lift the overall industry average to 860, a modest 3-point boost. Pre-Boomers have the highest satisfaction at 912, followed by Boomers at 878 and Gen X at 847. Gen X is the only generation to experience a decline in satisfaction from a year ago, dropping 8 points.

Gen Y is the largest generational group of auto insurance claimants at 40 percent, up from 33% in 2015. Gen X remains stable at 20 percent, while the share of Boomers and Pre-Boomers is shrinking.

“Gen Y is a large and influential segment of the claims market, so it’s encouraging to see that insurance providers continue to focus on improving this generation’s satisfaction,” said Mark Garrett, director of insurance industry analytics at J.D. Power.

Driving the increase in satisfaction overall, and specifically among Gen Y auto insurance claimants, is the offering of multiple communication options, such as email, online and telephone, during the claims process. The study finds that the use of technology to check the status of a claim has increased year over year by 5 percentage points to 42 percent of claimants. Email and online updates have each increased by 2 percentage points from last year to 27 and 17 percent, respectively.

But technology cannot fully replace humans during the claims process. The study finds that overall satisfaction is highest among customers who first contact their agent when filing a claim at 882, compared with 848 among those who file a claim directly through the website. In fact, only 7 percent of customers overall prefer to use digital channels (web or app) to report their claim. Gen Y has the highest preference for digital channels to report a claim, at 10 percent.

“While technology offers a customer more options, what we find is that even when customers file a digital claim they still want to talk with someone to get an explanation of the process, what to expect along the claims pathway and the timing,” said Garrett. “Even the younger generations, which are most comfortable using digital channels, still want to talk with someone. We see the biggest gains in satisfaction when technology is used as a complementary channel for receiving status updates.”

The study measures customer satisfaction with their most recent automobile collision claim. Depending on the complexity of the claim, claimants may experience some or all of the following areas measured in the study: first notice of loss; service interaction; appraisal; repair process; rental experience; and settlement. Satisfaction is calculated on a 1,000-point scale.

Other key findings of the study include:

Changing Role of the Agent: While some insurance providers are reducing the agent’s role in the claims process, the study finds that 80 percent of customers who purchased their policy through a local agent still call their agent first to report or seek advice regarding a claim. Among customers who call their agent first, 64 percent say their agent reported their claim, while 20 percent are transferred by their agent to a call center and 16 percent are redirected. Overall customer satisfaction is 882 when the agent files the claim, but slips to 858 when the customer is transferred to a call center and falls even further to 824 when they are instructed to contact the call center.

Costs of a Claim: Among the two-thirds of customers who have renewed their auto insurance policy since filing a claim, 28 percent say their insurance premiums have increased.

Satisfaction Affects Customer Loyalty, Advocacy: Satisfaction with the claims experience affects customer retention and referrals. Among delighted claimants (overall satisfaction scores of 900 or higher), 84 percent say they “definitely will” renew their policy and 83 percent “definitely will” recommend their insurer. Among displeased claimants (scores of 549 and below), only 12 percent say they “definitely will” renew and 7 percent “definitely will” recommend their current insurer.

Insurer Rankings

The Hartford ranks highest in auto claims satisfaction with an index score of 891, a 21-point improvement from 2015. The Hartford performs particularly well in the first notice of loss and service interaction factors.

Erie Insurance (886) ranks second, followed by Auto-Owners Insurance (885), American Family (874), Amica Mutual (874) and Nationwide (874).

The 2016 U.S. Auto Claims Satisfaction Study is based on responses from 12,228 auto insurance customers who settled a claim within the past six months prior to taking the survey. The study excludes claimants whose vehicle incurred only glass/windshield damage or was stolen, or who only filed a roadside assistance claim. Survey data was collected from November 2015 through August 2016.

For more information about the 2016 U.S. Auto Claims Satisfaction Study, visit http://www.jdpower.com/resource/jd-power-us-auto-claims-satisfaction-study.