FNOL Gets Ball Rolling, but Settlement Still Most Important in Homeowners Claims

NU Online News Service, July 28, 3:23 p.m. EDT

While claim settlement is the largest driver of customer satisfaction during a property claim experience, first notice of loss (FNOL) drives a significant 21 percent  of the experience and often sets the tone for the remainder of the claims process, a new J.D. Power and Associates study says.

The study, “2011 Property Claims Satisfaction Study,” notes that FNOL drives 21 percent of the experience for property claims that involve content loss as well as claims that do not involve content loss.

However, 40 percent of a claims experience that includes a content loss is driven by the settlement. The number climbs to 41 percent for claims that do not involve a content loss. “The settlement factor is vital to overall satisfaction with the insurer, regardless of whether the claim included content loss,” J.D. Power and Associates says in a management discussion of the study.

The discussion notes that key settlement performance indicators include:

  • Meeting settlement expectations, which was the “single-most impactful” performance indicator. “Insurers that excel in this area often rank high in overall satisfaction,” J.D. Power and Associates says. The study notes that four in five claimants say their insurer fully met their settlement expectations.
  • Avoiding negotiated settlements. “This type of interaction is never pleasant, regardless of the outcome, and often leads to dissatisfaction with the claims experience,” J.D. Power and Associates says.
  • Avoiding multiple payments. J.D. Power and Associates says satisfaction declines significantly when claimants are not paid in a single allotment.

The study also finds that insurance claimants are considerably more satisfied when key communication practices are performed by their insurance provider. According to the study, satisfaction averages 828 on a 1,000-point scale among claimants with content losses who spoke with two representatives throughout the claims process, and declines to 684 among claimants who had to speak with four or more representatives.

Claimants with a content loss who received a thorough explanation of the claims process and an estimate of how long it should take are “notably more satisfied than claimants whose expectations of the claims handling time were not established from the start (847 vs. 655, respectively),” J.D. Power and Associates says in a statement.

“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,” says Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates in the statement. “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.”

J.D. Power and Associates says Auto-Owners Insurance, The Hartford and USAA perform particularly well among insurers in providing claimants a satisfying property claims experience.

The 2011 study is based on surveys from nearly 3,000 insurance customers nationally who filed a property claim between November 2009 and April 2011, and evaluates 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.

About the Author
Phil Gusman, PropertyCasualty360.com

Phil Gusman, PropertyCasualty360.com

Phil Gusman is Managing Editor of PropertyCasualty360.com. Prior to joining National Underwriter in 2008, he was Editor of Insurance Advocate. Gusman has also served as Associate Editor of Crackdown!, an insurance fraud publication, and Assistant Editor of Empire State Report, which covers New York politics. He graduated in 2002 from Plattsburgh State University in New York. Gusman may be reached at pgusman@summitpronets.com. Follow him on Twitter: pgusman and PC360_Markets

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