J.D. Power: Homeowners Insurer Satisfaction High

NU Online News Service, Oct. 6, 3:06 p.m. EDT

Overall satisfaction with homeowners insurance increased significantly for the first time in five years, driven by favorable customer perceptions of the value of their policies, according to a J.D. Power and Associates survey.

The Westlake, Calif.-based information services company yesterday released its 2009 National Homeowners Insurance Study, now in its ninth year.

J.D. Power said the survey measured five key factors with homeowners insurance companies: policy offerings, price, billing and payment, interaction and claims.

The overall satisfaction average was 773 on a 1,000-point scale in 2009, an increase by 21 points from 2008.

J.D. Power said the overall increase was primarily attributable to substantial improvements in the price, policy offerings, and billing and payment factors. In particular, satisfaction with price improved by 46 points from 2008.

Discounts consumers received on their policies appeared to play a role in improving perceptions. The percentage of policyholders who reported receiving discounts increased 3 points in 2009 to 84 percent. Of the 27 insurance companies included in the study, 10 have experienced notable increases from 2008 in the proportion of their customers who report getting discounts.

J.D. Power said policyholders who receive discounts are significantly more satisfied than those who either do not receive discounts or are unsure of the discounts they receive.

"To maximize the lift in satisfaction that discounts may bring, insurance companies must clearly inform customers of the number and types of discounts they are receiving," said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates.

Informing a customer of discounts, even if it brings no change to the policy, can improve satisfaction by 90 points, he asserted.

Of the insurers surveyed, Amica Mutual, with a satisfaction average of 842, ranks highest for an eighth consecutive year among homeowners insurance companies. Also scoring well were Auto-Owners, Erie Insurance and State Farm, respectively, all above 800.

USAA, ranked high at 900, was not included in the rankings because coverage is limited to U.S. military personnel and their families.

Among those with the worst rankings were Travelers, Fireman's Fund and American International Group with rankings below 740.

The study found that more than eight in 10 customers report bundling multiple policies with their homeowners insurance company. Satisfaction with insurance companies' policy offerings increased with each additional policy purchased, with satisfaction averaging more than 170 points higher among customers with four or more policies with their insurer, compared with customers who hold only a homeowners policy with their insurance company.

"Keeping homeowners insurance customers well satisfied may pay dividends, as these customers are very likely to purchase additional insurance policies and other financial products from their insurer," said Mr. Bowler.

The study also found that improving satisfaction can also improve retention. An increase in overall satisfaction from an average of 750 to 800 may result in a 10- to 15 percentage-point increase in those who say they "definitely will" renew their policies. That increase can also improve the number of customers who "definitely will" refer their insurer to others by the percentage points.

The survey is based on responses from more than 12,900 homeowners insurance customers who were contacted between April and June of this year.