Why Is the Customer Experience in Insurance Stagnating?

The customer experience in the insurance industry hasn’t improved since 2012, according to the 2015 Temkin Customer Experience Ratings.

Temkin reports USAA is celebrating its fifth year in a row as the insurer with the best customer service, earning a 75% rating and ranking 52nd out of 293 companies across 20 industries. State Farm came in second, continuing a four-year streak, with a 71% rating and placing 100th overall, while Geico closed its third-place gap by 3% with a 70% rating.

“USAA continues to be the pace-setter across all the industries they play in,” says Bruce Temkin, customer experience transformist and managing partner at the Temkin Group. But “interestingly enough, both USAA and State Farm lost some ground this year.”

In fact, the insurance industry was one of 14 declining industry ratings, ranking seventh overall with an average 66% rating. “We continue to see that on average, across the board, customer experience is mediocre,” Temkin says. “Looking at the 20 industries collectively, what’s particularly interesting is that it’s the first year in the five years that we’ve seen more companies and more industries decline than improve.”

The Temkin Group asked 10,000 U.S. consumers about their recent experiences with 293 companies from 20 industries including banks, car rental agencies, investment firms, retailers, software firms and wireless carriers. The 15 rated insurers ranked as follows: USAA (75%), State Farm (71%), GEICO (70%), The Hartford (68%), Progressive (68%), Allstate (66%), AAA (63%), Nationwide (62%), Travelers (62%), Liberty Mutual (61%), American Family (61%), Farmers (59%), MetLife (58%), Amica (52%) and 21st Century (51%). The only insurers to improve their ratings from 2014 were American Family (+5 points) and Progressive (+2 points).

“I think it’s time for the group to put another surge of energy into improving customer experience,” Temkin says. “It’s stayed pretty much up to pace with customer expectations, but hasn’t made any progress since 2012. And I think that’s dangerous in the long term for many companies.”

The survey averaged scores from three dimensions—success, effort and emotion—to determine each company’s Temkin Experience Rating. “What separates USAA is the success and emotion piece,” Temkin says. “For State Farm, a lot of the differentiation has to do with success. They’re a model of agent-based insurer and what you’re seeing with State Farm is the power of their agents to help make sure that their customers get treated well.”

What would a perfect 100% Temkin rating look like? “If you think about the life cycle of a customer looking for an insurer, it would use plain language and be easy to find a policy and coverage they want,” Temkin says. From there, the options to connect to the insurer should be plentiful and seamless—allowing the customer to do what they want.

“Once I decided to go with a carrier, the process of signing up would be easy and straightforward and wouldn’t require me to provide any information more than once or anything more than I need to,” Temkin says of the “effort” piece. “Make the process very easy and remove steps for the customer.”

“Emotion” comes into play when claims and accidents arise. “If I’m making a claim, it’s probably because something happened to me that made me emotional—whether it’s something happened to my house, I got into a car accident or it’s a life insurance policy and a loved one passed away,” Temkin says. “In all those cases, I have an emotional situation going on and the faster you can resolve my claim, tell me what you’re going to do and how we’re going to deal with it, the less emotional strain I have.”

As pricing gets more competitive and more visible, it’s important for insurers to have a good reputation around service and experience, Temkin says. “If one insurance policy is $600 a year and another is $1,000 a year, it almost doesn’t matter what the experience is between the two—I’m going with $600,” he points out. “But if I’m chased with the decision between $600 and $625 a year, I’m much more apt to make my decision based on which company I’d rather do business with.”

So what can the IA channel take away? “Independent agents have historically tried to keep this arm’s length distance from carriers, but what we’re seeing now is some agents using their technology tools, blending them together with carrier’s tools and figuring out how to get the best of both worlds—that’s the trick going forward,” Temkin says. “How do you take advantage of the value of the independent agent but also tap into the capabilities of the insurer at the same time? That’s where I think we are now with some of the leading edge efforts.”

Morgan Smith is IA assistant editor.