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Survey: Property insurance satisfaction falls for first time in 5 years

A lack of major catastrophes has resulted in a softer insurance market and lower homeowner satisfaction with how their property claims were handled. (Photo: iStock)
A lack of major catastrophes has resulted in a softer insurance market and lower homeowner satisfaction with how their property claims were handled. (Photo: iStock)

Customer satisfaction with settlement amounts and service interactions for policyholders filing property claims dropped for the first time in five years according to the new J.D. Power 2016 U.S. Property Claims Satisfaction Study.

The study measures five factors related to consumers’ property claims experience: Settlement, first notice of loss, estimation process, service interaction and repair process, and is based on a 1000-point scale.

As the industry experiences a period of declining premiums because of fewer weather events, information from the study indicates that insurers are focusing more on cutting costs and less on customer satisfaction. One of the key drivers was service interaction with a 28-point drop in satisfaction with claims professionals, and 8-point drops in service interaction and involvement with local agents.

Small things such as returning phone calls dropped 1%, with only 42% of respondents saying that someone was available to assist them immediately when they contacted their insurer.

J.D. Power says that weather events were a significant force in the decline of customer satisfaction and were based on the manner in which insurers handled the winter storms in the Northeast in 2015 and severe weather and hail claims in Colorado in 2014.

Related: Customer satisfaction: Are insurers keeping up with rising expectations?

“During times of catastrophic events, insurance companies typically ramp up and have teams of claims professionals poised and ready to process claims locally in the affected region,” said Greg Hoeg, vice president of U.S. insurance operations at Westlake Village, Calif.-based J.D. Power. “However, maintaining a high level of support is not cost effective when there is a lull in large events, and especially when rates begin to fall. Belt tightening to a leaner team can sometimes mean less support and longer response times to process claims. Insurers need to be aware when cost cutting impacts response times. The less satisfied customers are with the claim process, the less likely they are to renew their policy.”

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House fire claim

Customer satisfaction dropped 27 points for fire claims and 38 points for mold claims. (Photo: iStock)

Insurers know that excellent service directly affects whether or not a policyholder will renew, and the study found that 81% of highly satisfied claimants (those with satisfaction scores over 900) say they “will definitely” renew their policy and recommend their current insurer.

The number drops significantly for those who are displeased (scoring 549 or less), with only 14% of those claimants saying they will definitely renew and only 7% saying they would recommend their insurer.

Related: Driving consistency in claims outcomes

Interestingly, younger property owners showed the greatest need for assistance with the claims process, with 31% indicating they wanted additional help in selecting a contractor. Those with less homeowner experience are showing a great reliance on insurers for assistance in managing property repairs.

With fewer major catastrophes, nonweather-related water damage claims were the most frequently reported claims, and customer satisfaction for those dropped 19 points (to 835), followed by fire claims which dropped 27 points (to 839), and mold claims which dropped 38 points (to 834). Hail claims had the highest satisfaction rate, coming in at 858 on the 1,000-point scale.

Lincoln, R.I.-based Amica Mutual was the leader in property claims satisfaction with a score of 898, followed by Costa Mesa, Calif.-based Automobile Club of Southern California Insurance Group at 878, Bloomington, Ill-based Country Financial at 863, and Northbrook, Ill.-based Encompass and Erie, Pa.-based Erie Insurance, which tied at 863. San Antonio, Texas-based USAA scored an 875, but is not included since it is a provider open only to members of the military and their families.  

The results of the study were based on more than 5,700 responses from claimants who had filed property claims between January 2014 and December 2015.

Continue reading to see the full rankings ...

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