Approximately 1,000 customers who are risk professionals and employees of companies with annual revenues or an operating budget exceeding $100 million participated in the J.D Power 2014 Large Business Commercial Insurance Study, which measures customer satisfaction for commercial property, workers’ compensation and auto insurers across five factors: interaction, program offerings, price, billing and payment, and claims.
Broker satisfaction ratings were based on four aspects: ease of contacting the broker, the reasonableness of the fees, the guidance provided when it comes to selecting programs, and the timeliness of resolving a contact or providing a solution to an issue.
Voice of the customer
“This is the first time someone has captured the voice of the customer in the large commercial insurance industry from such a wide number of risk management professionals,” says Tim Bebout, director of the commercial insurance practice for J.D. Power. “Risk professionals have a very well-rounded point of view and can help provide an understanding of the key measures of satisfaction in this industry.”
The study looked at the responses of all the risk professionals from an industry standpoint, asking them to identify themselves and their responsibilities. Nearly 40% of the respondents had some level of enterprise risk management as part of their responsibilities, and these individuals were the least satisfied of the group.
Brokers have traditionally been known as facilitators, bringing the right insurers, products and services together for their customers. Risk professionals want to see insurers more as partners in a proactive relationship. Each contributes to the overall benefit of the risk professional, and there is a significant difference in the satisfaction rates when there is a strong collaboration between the three parties.
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“There is a strong indication that risk professionals want to have a relationship with both the broker and the insurer,” said Bebout. They have different expectations for both parties and “are able to separate their overall impression of their insurer from their broker interactions, evaluating their insurer independently from their broker.”
The study found that customer satisfaction was notably higher when insurers were involved with the service interactions as opposed to just the brokers, 865 vs. 769, respectively on a 1,000-point scale.
Overall satisfaction with brokers averaged 854, with just 48 points separating the highest and lowest scoring brokers. The most important factor in determining satisfaction with a broker centered around how easy it was to contact the broker. At 888, this was the highest score in the overall customer experience, with reasonableness of fees being the lowest at 828.
The ability of a broker to understand a customer’s needs also impacted satisfaction ratings with 84% of customers rating their brokers who “completely” understood their needs at 890. Satisfaction among the remaining 16% dropped sharply to 662 for brokers who only partially understood their customers’ needs or didn’t understand them at all.
Benefits to exceeding expectations
The study found that there are definite benefits for brokers and insurers who exceed their customers’ expectations by looking at the complete customer experience for risk professionals said Bebout. These will translate into higher policy retention rates, lower price sensitivity, and an increased likelihood that customers will refer others to an insurer or broker.
In fact, 62% of the property insurance customers who were “pleased/delighted” with overall satisfaction scores of 800 or higher said they “definitely will” renew with their current insurer and 80% “definitely will” recommend their insurer. Of the customers who were indifferent/displeased with scores below 800, only 22% said they “definitely will” renew and only 26% said they “definitely will” recommend their insurer.
The satisfaction rate among 93% of the auto insurance customers who had not experienced a problem during renewal was 742. Insurers who were able to minimize the number of billing errors for workers’ compensation saw higher satisfaction numbers with 62% of those who have not experienced an error averaging 807, compared to 518 for those who experienced one or more errors.
There is a lot of claims activity surrounding workers’ compensation and those factors impact satisfaction ratings. “Ninety-four percent of customers had at least one claim in the last year,” said Bebout, “and there were almost 100 claims in a year for a large number of the respondents. These claims are complex and have long tails. Billing and payment are important factors, and it is a very price sensitive type of business, especially for companies that have thousands of employees. There are more issues and errors will impact satisfaction.”
According to Bebout, a number of factors contributed to the gap between the highest- and lowest-performing insurers in each of the segments. For carriers, flexibility in pricing, the types of coverage offered and how they interacted with the risk professional impacted their ratings. They scored the highest if they were involved in the claims process, advised clients in terms of loss control, and interacted with the underwriters when putting together insurance coverage programs for clients.
Bebout said the study identified several key factors that impact the insurance ratings for both brokers and insurers. For insurers these were interaction, program offerings, price, billing and payment, and claims handling.
Four factors impacted the brokers’ ratings: ease of contacting the broker; reasonableness of fees; guidance in selecting program offerings; and timeliness over resolving a contact or how quickly the broker was able to provide a solution or put a customer in contact with the right people to solve a problem.
How frequently a customer interacts with a broker or insurer throughout the year also impacted the satisfaction ratings. “If you aren’t interacting with a risk professional over the course of the year, it has a dramatic impact on the satisfaction of the risk professional,” explained Bebout. “It’s important to provide a solution to their needs.” He gave an example of a company opening up a new facility and assisting the risk manager in identifying what kind of coverage they will need and what risks they might anticipate.
More strategic discussions needed
This is especially important for those involved in enterprise risk management. More strategic discussions involving the entire enterprise, planning for future insurance needs, discussing where the company is going, major concerns they have and how the broker and insurer can offset some of them are valuable conversations to have with risk managers. There is a constant need to look at and evaluate new risks such as data breaches and loss control measures.
The value of studies such is this is that they provide insurers and brokers with the information they need to translate the findings into an actionable plan. Bebout says they need to look at the factors behind the score that the company can improve and take actions that will be worth the cost.
“What the study does is it gives them some insight and help to prioritize where they should put their efforts,” he adds. “Customer satisfaction affects retention, which in turn reduces acquisition costs. People buy more products if they are satisfied. They make referrals and are advocates for the insurer and broker. Everywhere where J.D. Power has been working with various industries we see improvements in customer satisfaction levels.”
Among the companies participating in the study were: American International Group, Allianz AG, CHUBB, Liberty Mutual, Swiss Re, ACE Limited, Berkshire Hathaway Group, Zurich Insurance Group, The Hartford, Travelers, Aon Corp., Marsh & McLennan Cos. Inc., and Willis Group Holdings P.L.C.