Quick claims settlements pushed 2016 P&C insurance customer satisfaction to record heights. But could these insurers do more?
Even though 2016 ranked as one of the worst years for weather-related catastrophes, homeowners nevertheless expressed satisfaction with their insurance carriers for expeditiously handling claims. When consumer analytics firm J.D. Power surveyed over 6,600 policyholders last year for its “2017 U.S. Property Claims Satisfaction Study,” the result was a record customer satisfaction score of 859 (out of 1,000), up from 846 in the previous report.
How did the P&C industry manage to elevate customer satisfaction at a time when catastrophic losses reached record heights? According to the J.D. Power survey, the key was focusing on settling claims fairly. Of all the criteria used to grade customer service — settlement, first notice of loss, estimation process, service interaction, and repair process — settlement ranked highest.
“Following the significant declines in customer satisfaction found in the 2016 study, property and casualty insurers have redoubled their efforts to improve the settlement process and fine-tune their customer interactions, efforts that have been clearly recognized and appreciated by homeowners who experienced significant losses this past year,” VP of U.S. Insurance Operations at J.D. Power Greg Hoeg said in a statement detailing the survey results.
Still Room For Improvement
The J.D. Power report also pointed to some areas where insurers need to improve, such as handling claims that follow water-related damages. Homeowners rated insurers 40 points lower than average (on a scale of 100) for failing to quickly resolve those claims.
Considering the massive havoc wreaked by floods and hurricanes, that result is not surprising — homes destroyed by hurricanes typically result in complex claims that take a while to settle. For instance, last year’s Hurricane Matthew left behind $3 billion in losses. “Insurers that manage to get the settlement process and customer interaction equation right in these types of disruptive and often catastrophic scenarios are those that raise the bar for the industry,” Hoeg said.
Troubling News for the Insurtech Industry?
While the J.D. Power report was met with celebration in the C-suites of established carriers, its findings may be a bit more troubling for insurtech startups. Tech-enabled insurance newbies like Lemonade have built their brands on the failings of traditional insurers, promising to accelerate claims processing and decrease headaches by shifting to a fully digital process that customers can complete via their smartphones and other mobile devices.
The J.D. Power report, however, seems to suggest that customers still favor traditional insurers, and that great customer service — not just the implementation of tech gadgets — is the best path to rave reviews. When J.D. Powers surveyed auto policyholders last year, it concluded the majority of customers who contacted their agents when filing a claim were more satisfied with the service than those who didn’t.
Due to some combination of frequent natural catastrophes and the rising threat of insurtech disruptors, P&C carriers have upped their game in the customer service arena, and it shows in their financial results: according to Watermark Consulting, home insurance carriers that provided outstanding customer experiences outperform the market and their peers, registering total returns 42 points above the Dow Jones Property & Casualty Market Index.
Agents Still Matter
For the P&C industry at large, the message sent by the homeowners in the J.D. Power survey is that customer service still matters. Technology streamlines some processes, but it can never overcome a poor policyholder experience after a catastrophic event.
Another takeaway from the J.D. Power survey may be that your homeowner clients still rely on you to help them file claims when a natural disaster strikes. Their homes are their largest asset, and seeing it destroyed or severely damaged is a traumatic event that can put lives on hold for months. As their agent, you should be there not only to help settle the claim quickly so they can back to their normal lives, but also to serve as a sympathetic confidant as well.
At the end of the day, your clients want a fair and speedy resolution of their claims following a catastrophe. So, you should be prepared to provide that service and more.