Auto Claimant Satisfaction Up Despite Higher Out-of-Pocket Costs

Consumers are noticeably happier with their auto claims experience compared to just one year ago, according to J.D. Power and Associates' 2012 U.S. Auto Claims Satisfaction Study.

The uptick in satisfaction levels is being driven primarily by an improvement in claimants' perceptions of the fairness of settlement terms. Aside from fairness, policyholders cite an insurer's ability to manage expectations and communicate the progress of a claim as crucial components of the satisfaction equation.

For a fifth consecutive year, Auto-Owners Insurance ranks highest in overall satisfaction with a score of 887 (on a 1,000-point scale). Next were Amica Mutual and Erie Insurance, which tied at 876 points, followed by another tie—Automobile Club of Southern California (AAA) and COUNTRY, which both earned 874 points. 

Based on responses from more than 12,508 auto insurance customers who settled a claim within the past 6 months, the study measures satisfaction with the claims experience for auto physical damage loss. Depending on the complexity of the claim, a claimant may experience some or all of the following factors measured in the study: first notice of loss (FNOL); service interaction; appraisal; repair process; rental experience; and settlement.

Results Show Six-Point Improvement

Overall claimant satisfaction has increased significantly to 852 index points, a six-point improvement from 2011. Satisfaction has increased in five of the six factors year over year, with settlement, the most important factor contributing to overall satisfaction, increasing by nine points to 846. Settlement satisfaction has increased by 16 points among claimants with a total loss. The average total loss settlement has increased by nearly $690, compared with 2011, driven by increasing used-vehicle values throughout much of 2012.

“As used vehicle sale prices increase, the value of the loss settlement also increases,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “According to our Power Information Network, a database of vehicle sales transactions, used-vehicle sales prices peaked in May and June of this year, averaging nearly $18,500, compared with approximately $17,700 in January of this year.”  

It is important to note that satisfaction with settlement has improved overall despite the fact that claimants are actually spending more of their own money. In fact, the average out-of-pocket costs incurred have increased by $26 from 2011, to $403. Out-of-pocket costs include claimants' deductible and any additional expenses incurred, such as rental car or repair costs. Settlement satisfaction relies heavily on claimants' perceptions of the fairness of the settlement. In the 2012 study, this is an indication that insurers are managing claimants' expectations more effectively, as satisfaction has increased despite the increase in costs incurred by claimants.     

“Providing exceptional customer service is an important element in driving the perception of being treated fairly,” said Bowler “Claimants' perception of fairness is more than just the amount of the settlement, especially for repairable vehicles, where claimants are more focused on their vehicle being returned in its pre-accident condition.  Focusing on keeping claimants updated and quickly communicating what will be covered in the claim also have a major impact on their perceptions of how fairly they are treated.”  

J.D. Power and Associates notes the study excludes claimants whose vehicle only incurred glass/windshield damage or was stolen, or who only filed roadside assistance claims. All survey data was collected between November 2011 and September 2012.