Auto insurance customers are typically more satisfied with their claims experience than are homeowner policyholders–although personal lines carriers in general rank higher on service than do players in other industries, a new J.D. Power and Associates study found.

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

While auto insurers scored higher, Jeremy Bowler, senior director of the insurance practice at J.D. Power, told National Underwriter that both scores “could win a highest rank trophy” in other industries, noting that companies across various fields tend to average in the 700s to low-800s.

“Home claims are typically far more complex than auto claims, and homeowner insurance claimants tend to have less knowledge of the specifics of their policy coverage than do auto claimants,” Mr. Bowler said in a statement explaining the relative success of auto insurers in handling claims compared to homeowners carriers.

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 a homeowner's claims experience have a positive impact on customer loyalty and advocacy.

Indeed, among customers of insurance companies that achieve high satisfaction scores–defined as averaging 837 or above–two-thirds say they “definitely will” renew their policy, while 64 percent say they “definitely will” recommend the insurer, J.D. Power noted.

For customers of insurers with lower levels of satisfaction–816 or below–only 49 percent say they “definitely will” renew, while 42 percent say they “definitely will” recommend the insurer, added 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 found, less than three-fourths of homeowners claimants indicate that their 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, according to J.D. Power.

“On average, satisfaction among home claimants who negotiate their settlement is 117 points lower than among those who didn't negotiate,” Mr. Bowler said. “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 found, “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 that satisfaction with respect to reporting through an agent depends on how the customer purchased the policy. If the coverage was sold through a local agency, he said, there is a disadvantage for the agency not to be involved in the claims process.

However, if the policy was purchased through a direct writer, he added, it is a moot point, as direct channels received high marks for first notice of loss as well, he said.

Special Reports /

Claims Satisfaction High, Though Auto Tops Homeowners

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