Insurer Call Centers Equal Less Satisfaction, Says J.D. Power

Auto and home insurance customers who deal with a local agency tend to be more satisfied than those who interact with their insurer's call center, according to a customer satisfaction survey from J.D. Power and Associates.

The Westlake Village, Calif.-based firm's "2008 Insurance Customer Contact StudySM," an inaugural study, is based on customer dealings with their insurance carrier either through an agency, call center or Web channel.

Customers, the report said, are more loyal to agents than insurers.

For each service channel, the study examined the key practices that drive high satisfaction levels, which may lead to policy retention and customer advocacy.

According to J.D. Power, across all service channels, routine service interaction is the most important element driving customer satisfaction, accounting for 38 percent of overall customer satisfaction with their insurer.

"Routine service interaction between customers and their insurer has a considerable impact on overall satisfaction, which in turn positively impacts policy retention and renewal rates--all of which are considerably beneficial for an insurer's bottom line," said Jeremy Bowler, J.D. Power and Associates insurance practice senior director.

The study found more than 75 percent of personal auto and home insurance customers interacted with their insurer either through an agency, call center or Web site during the past 12 months.

Among insurance customers who interact with a local agency, satisfaction averages 884 points on a 1,000-point scale, compared with 824 points among those who interact with their insurer's call center, J.D. Power found.

While 78 percent of insurance customers are serviced through agencies, only 30 percent interact exclusively with their agency, the report said.

Slightly more than one-half of all customers report using their insurer's call center or Web site, and 64 percent use a combination of agency, call center and Web site channels to interact with their insurer during the course of a year, the study reported.

Regardless of the service channel a customer chooses, those who accomplish their reason for contact through a single channel are significantly more satisfied with their insurer than those who had to use multiple service channels to resolve their issues, J.D. Power said.

"Having a streamlined contact process is most ideal for customers, and in particular, those interacting with their insurer's call center often have higher expectations than those interacting with an agency," said Mr. Bowler.

Call center customers, he said, "are most satisfied when their issues are resolved the same day they contact their insurer, while agencies can take slightly longer before customers become less satisfied. Similarly, customers expect an agent to retrieve their information in two minutes or less, while call center representatives have only one minute before satisfaction declines drastically."

The study also found that agent-served customers tend to be more loyal to their agent than they are to their insurer. Among customers who perceive their agent to be independent, 44 percent say they "definitely will" renew with their insurer, while 60 percent say they "definitely will" continue doing business with their agency.

Furthermore, only 7 percent of customers indicate they "definitely will not" switch insurers if their agent recommended another company.

The study also reveals the following insurance customer behavior patterns:

One-fourth of a customer's overall impression of their agent, agency staff, or call center representative is driven by their courtesy and friendliness.

Two in five customers meet with their agent in person, and most visit their agent without a scheduled appointment.

Time is critical in satisfying call center customers, as key satisfaction drivers include not being placed on hold, connecting to a call center representative within two minutes and accessing account information within one minute.

J.D Power said the study was based on responses from 11,828 home and auto insurance customers who interacted with their current insurer within the past 12 months. The online study was fielded in June 2008.