Why Are Homeowners Less Satisfied with Claims Service?

For the first time since the study launched in 2011, customer satisfaction has declined among homeowners who filed a property claim, according to the J.D. Power 2016 U.S. Property Claims Satisfaction Study.

The report, which analyzes customer ratings on a 1000-point scale, shows that satisfaction decreased five points since 2015, from 851 to 846. “From a data standpoint, this is a significant drop,” explains Mark Garrett, director of insurance industry analytics at J.D. Power.

Until this year, satisfaction scores showed a consistent upward trend.

The ratings are based on five categories: settlement, first notice of loss, estimation process, service interaction and repair process. Service interaction registered the most significant drop in satisfaction—a decrease of eight points. Specifically, claimants were less satisfied with local agents (-8) and claims professionals (-28).

The agent’s responsiveness, Garrett points out, is partially accountable for the decline. “There’s some phone tag in the claims process if the agent isn’t immediately available,” he explains. “That’s a big element in terms of responsiveness, and people rate that.”

It’s often necessary for an agent to communicate with other parties once a homeowner files a claim. Meanwhile, the client is left waiting in the dark. “The agent doesn’t have that information right at their fingertips,” Garrett says. “But it’s helpful to let the customer know that you got their message and are going to get back shortly. Acknowledge that you plan to follow up.”

Greg Hoeg, vice president of U.S. insurance operations at J.D. Power, suggests that the ongoing soft market also plays a significant role in customer satisfaction: “Prices are starting to decrease on a national basis in both commercial and personal lines,” he points out. “When pricing starts to decline, many [insurers] will start focusing on cost control.”

In turn, customer service falls by the wayside, which has a direct effect on revenue; 40% of displeased claimants said they planned to switch insurers within the next 12 months. By contrast, 81% of highly satisfied claimants said they “definitely will” renew their policy.

Weather-related events also influenced whether or not homeowners were pleased with the claims process. Specifically, winter storms in the Northeast in early 2015 caused claims to “skyrocket,” making it harder for agents to tend to everyone at once, Garrett explains.

Meanwhile, Western states, most notably Colorado, also experienced severe weather in late 2014. “The population is more spread out in that region, which has something to do with lower response times,” Hoeg points out. “It’s harder to get to the location, examine the damage and handle the claim”—and that makes customers feel like a lower priority.

While some of these factors are unavoidable, agents can try to help deliver a seamless claims process to clients by walking them through the steps. “As soon as a claim comes up, the agent can reinforce what expectations are, and identify where they’ll be most active in the process,” Hoeg advises. “It’s the unknown that bothers [clients].”

Even when the claimant approaches the insurer first, independent agents can step in and make the process easier for clients. Be proactive: “Agents can contact the customer without the customer calling them first,” Garret says. “It’s very valuable for you to reach out to your customer to check in on them.”

In fact, more agents are doing so. According to the study, 51% of the time, the agent initiated a follow-up call to the customer. Just make sure you and the insurer are on the same page, Hoeg warns, to avoid inconsistencies in the information you’re both providing to the insured.

Satisfied homeowners will keep your business running, but it’s important to keep their best interests at the forefront of the claims process. “This is something that personally affects them very deeply. You’re talking about their entire sense of security,” Hoeg says. “Home is where the heart is.”

Jordan Reabold is IA assistant editor.