NU Online News Service, Dec. 22, 3:21 p.m. EST

Auto insurance customers are typically more satisfied with their claims experience than homeowners insurance customers, a new J.D. Power and Associates study finds.

The "2009 Home Claims Satisfaction Study" and corresponding auto study found that customer satisfaction with the home claims experience averages 828 on a 1,000-point scale compared 842 for auto claims experience.

While auto insurers scored higher, Jeremy Bowler, senior director of the insurance practice at J.D. Power told NU Online that both scores "could win a highest rank trophy" in other industries. Companies across various industries, he said, tend to average in the 700s to low 800s.

The homeowners insurer score of 828, Mr. Bowler said, is high compared to other industries. Companies scored as low as 769 and as high as 893, he said.

Speaking to the reasons behind auto insurers' success relative to homeowners insurers, Mr. Bowler said in a statement, "Home claims are typically far more complex than auto claims, and homeowners insurance claimants tend to have less knowledge of the specifics of their policy coverage than do auto claimants."

However, he added, "Although satisfying home claimants is particularly challenging, it's still crucial for insurance providers to meet the needs of these customers, given the significant impact the experience has on long-term policy retention."

For one, J.D. Power noted that higher levels of satisfaction with the home claims experience have a positive impact on customer loyalty and advocacy. Among customers of insurance companies that achieve high satisfaction scores, defined as averaging 837 or higher, two-thirds say they "definitely will" renew their policy, while 64 percent say they "definitely will" recommend the insurer. J.D. Power said.

For customers of insurers with lower levels of satisfaction, 816 or below, only 49 percent say they "definitely will" renew and 42 percent say they "definitely will" recommend the insurer, said J.D. Power.

First notice of loss is an area where homeowners insurers have significant room for improvement, according to J.D. Power. During the first notice of loss process, the study notes, less than three-fourths of home claimants indicate that the insurer provided an explanation of their policy coverage, compared with 81 percent of auto claimants. This lack of understanding among claimants leads to difficult and stressful settlement negotiations, said J.D. Power.

Mr. Bowler said, "On average, satisfaction among home claimants who negotiate their settlement is 117 points lower than among those who didn't negotiate. By thoroughly explaining the limitations of the policy coverage and fully managing customer expectations, insurance companies may be able to lower the number of negotiations and improve claimant satisfaction considerably."

For auto insurance claims, the study found higher satisfaction when agents handle the first notice of loss, rather than a company call center. "While involving agents in [first notice of loss] provides a lift in satisfaction," the study notes, "the lift is not simply due to less severe claims being handled by agents."

The satisfaction is "more likely attributable to agents who take [first notice of loss] having a higher tendency to follow up with the claimant, offering a trusted advocate to assist and answer questions throughout the claim."

Mr. Bowler told NU Online that satisfaction with respect to reporting through an agent depends on how the customer purchased the policy. If the policy was purchased through a local agency, he said, there is a disadvantage for the agency not to be involved in the claims process. If the policy was purchased through a direct writer, he added, then it is a moot point. Direct channels received high marks for first notice of loss as well, he said.

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Claims Satisfaction High - Auto Tops Homeowners

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