Homeowners and renters are giving record-high customer satisfaction scores to their insurers, but Hurricanes Harvey and Irma could place those numbers in jeopardy as property losses mount, J.D. Power said.
Overall customer satisfaction scores reached an all-time high of 808 out of 1,000 among homeowners and 834 among renters, J.D. Power found in its 2017 U.S. Home Insurance Study released recently. Improvements in policy offerings drove the increase. The worry now, however, is that Harvey and Irma could stretch customer service abilities and undermine those gains.
“Although property insurers have made great strides in overall customer satisfaction over the past several years, the areas where they consistently see the lowest satisfaction scores are price and direct customer service,” Greg Hoeg, vice president of U.S. Insurance Operations at J.D. Power, said in prepared remarks. “These two areas in particular will be under enormous stress as insurers address losses from the recent hurricanes.”
In other words, Hurricanes Harvey and Irma could force insurers to take action in ways that will upset their customers and potentially hurt their images in the marketplace. But they may be able to take steps to mitigate those challenges, J.D. Power said.
“The risk to customer satisfaction in the wake of catastrophic events transcends those directly affected, and expands to other insureds whose satisfaction with service is also affected by the image of their carrier,” Robert Lajdziak, business consultant for the North American Insurance Practice at J.D. Power, said in prepared remarks. “Further, if carriers need to raise rates they need to execute on several best practices that mitigate the potential negative effect associated with premium increases. “Examples include ensuring customers understand their policy, explaining what the policy covers and discussing premium change options.”
Among J.D. Power’s other major findings:
- While overall customer satisfaction rose, price and direct customer service interactions are still a problem. J.D. Power noted that both interactions scored lowest, particularly the use of a call center, website or assisted online channels. But multichannel interactions that included direct and live channels throughout the year led to the highest levels of customer satisfaction.
- About 48 percent of customers say they completely understand their policy. This comes as overall satisfaction among home insurance customers who understand their policy and the details of what it covers is 92 points higher than those who say they don’t fully understand their coverage.
- Overall awareness of InsurTech innovators is at 5 percent of all property customers. But millennial customers rank at 11 percent. Among millennials who say they are aware of key InsurTech startups, 29 percent say they “definitely will” or “probably will” purchase policies from one in the future.
- For the 16th year in a row, Amica Mutual scored highest in the homeowners insurance segment in terms of customer satisfaction, with an 866. Shelter ranked second with 850, and Country Financial scored third with 839.
- In the renters insurance segment, Erie Insurance Scored Highest with an 832. American Family was second with 844, and State Farm placed third with 833.
The U.S. Home Insurance Study examines overall customer satisfaction with homeowners and renters insurance. J.D. Power measures customer satisfaction in both areas by examining five factors: interaction; policy offerings; price; billing process and policy information; and claims. Satisfaction is calculated on a 1,000-point scale. Responses from 15,909 online interviews conducted in June-July 2017 form the basis of the study.
Source: J.D. Power