insurance claim for on desk in office showing risk conceptCustomer satisfaction with property insurance claims dipped for the first time in five years. The reason why: Carriers appear to be cutting service to reduce expenses in a toughening market cycle, J.D. Power found in its 2016 annual survey of U.S. property claims satisfaction.

Results show an overall claims satisfaction score of 846 out of a possible 1,000, down five points from 2015.

Greg Hoeg, vice president of U.S. insurance operations at J.D. Power, explained that insurers typically ramp up claims processing when catastrophic events strike in order to have teams ready to address issues. But that high level of readiness is not cost-effective to maintain when catastrophic events are few and far between, and rates fall. Regardless, the pullback can hurt customer satisfaction, he noted.

“Belt tightening to a leaner team can sometimes mean less support and longer response times to process claims,” Hoeg said. “Insurers need to be aware when cost cutting impacts response times. The less satisfied customers are with the claims process, the less likely they are to renew their policy.”

J.D. Power calculates its score by measuring property claims experience involving five factors among insurance customers who filed a claim: settlement, first notice of loss, estimation process, service interaction and repair process. The global marketing information services firm said that service interaction slipped the most, by eight points, driven by lower scores in local agent and claims professional interactions. More than 5,700 responses came in from homeowners insurance customers who filed a property claim between January 2014 and December 2015.

According to the results, weather events were a big driver in the decline in customer satisfaction this year. As J.D. Power explains it, survey results can be adversely impacted by the way insurers handled a few major events. There were a few major ones in 2015, including winter storms that hit the Northeast earlier in the year.

But weather is only part of the issue. The other factor appears to be cyclical, with property/casualty insurers hitting a cycle of reduced profitability because of declining premium rates. With that backdrop, study data pointed to insurers cutting costs and shifting away from customer satisfaction in the process, J.D. Power said.

Here are some related findings from the survey:

  • Just 42 percent of customers said that someone was always available immediately when they contacted their insurer for assistance.
  • Satisfaction with how insurers handled non-weather-related water damage claims dropped 19 points to 835.
  • Satisfaction with handling of theft claims scored at 840, 20 points higher than 2015.
  • Satisfaction with fire claims and mold is 839 and 834, respectively, reflecting drops of 27 points and 38 points.
  • About 31 percent of younger property claimants said they want additional help in selecting a contractor for a claim. J.D. Power sees this as younger customers seeking more help in coordinating overall repairs.
  • 81 percent of highly satisfied claimants (with scores 900 or higher) said they’d definitely renew their policy and recommend their current insurer.
  • Of the displeased scores (549 or less), just 14 percent said they’d definitely renew, and 7 percent said they’d definitely recommend their insurer to others.
  • 13 percent of displeased claimants said they switched insurers due to their claims experience, with 40 percent noting an intention to shop for a new insurer within the next year.
  • For the fifth year in a row, Amica Mutual scored highest in overall satisfaction with property insurance claims, coming in at 898.

Source: J.D. Power & Associates