Positive Insurance Claim Experience Maintains Customer Loyalty

July 27, 2010

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Analytics, Automated & MarTech | Data-driven | Financial Services | PR | Real Estate

Among the 6% of homeowners insurance customers who experience a home claim each year, a positive claims experience may drive long-term loyalty, according to [pdf] a new study from J.D. Power & Associates.

Findings from the “2010 Home Claims Satisfaction Study” indicate that a positive claims experience may foster notable long-term loyalty, while a negative claims experience may drive claimants to shop for a new insurer.

For this analysis, profiled insurers were segmented into one of three tiers based on their Customer Satisfaction Index (CSI) scores. Seven insurers with index scores between 840 and 908 were placed in the High Satisfaction tier, while the Medium Satisfaction tier includes seven insurers with index scores closer to the industry average of 818, ranging between 812 and 831.

The three remaining insurance companies profiled in the study achieved index scores ranging from 737 to 808, and are grouped in the Among the Rest tier.

Highly Satisfied Claimants Renew, Recommend
Not unexpectedly, claimants of companies in the High Satisfaction tier are significantly more likely to say they “definitely will” renew their coverage or “definitely will” recommend their insurer than are claimants of insurers in the other two satisfaction tiers.

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Furthermore, claimants of insurers in the High Satisfaction tier are less likely to shop in the next 12 months for a new insurer and are more likely to make positive comments about their insurer, compared with claimants in the other two tiers.

Meanwhile, one in 10 claimants of the three companies in the Among the Rest tier indicate that they have already switched insurers, compared with only one in 25 claimants of High Satisfaction insurers.

Providers Best at Offering Flexibility
More than 80% of claimants indicate that they experienced successful execution on four of the top 10 service practices, in descending order from the most-frequently cited: received flexible appraisal appointments; provided with clear contact information; met settlement expectations; and returned calls as promised.

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However, for the remaining six service practices, fewer than three-quarters of claimants indicate they experienced the best practice, in descending order from the most-frequently cited: did not need to repeat information; were given an accurate expectation of how long their claim would take to process; interacted with no more than two insurance company representatives throughout their claims process; were proactively notified of any claim status changes; received follow-up after the claim to ensure everything was okay; or were offered a choice of how they would most like to be kept updated on the progress of their claim.

The three KPIs relating to after-the-fact communication: were proactively notified of any claim status changes; received follow-up after the claim to ensure everything was okay; or were offered a choice of how they would most like to be kept updated on the progress of their claim, were mentioned by particularly few respondents. About 60% said they were proactively notified of any claim status changes, with slightly fewer receiving follow-up and only about 50% offered a choice of update.

Meeting KPIs Significantly Boosts Satisfaction
Overall, approximately one in six (17%) homeowners claimants indicates having missed none of the top service practices during their most recent claims experience. Among these claimants, satisfaction with their insurer averages 929, significantly above the industry average of 818.

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Satisfaction gradually declines as service practices are missed, but remains above the industry average until a third KPI (key performance indicator) is missed, when it slips below the average to a score of 792.

Once a fourth KPI is missed, satisfaction falls more than 150 index points below the industry average, to about 650. More than one-quarter (26%) of claimants say that their insurer missed four or more of the top KPIs.

Excellent Customer Service Boosts Spending
Americans will spend 9% more with companies that provide excellent customer service, according to recent data from American Express.

A majority of Americans report that quality customer service is more important to them in today’s economic environment (61%) and will spend an average of 9% more when they believe a company provides excellent service.

About the Data: This study includes evaluations from 2,900 insurance customers nationally who filed property claims between November 2008 and April 2010.

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