Severe events, inflation and supply chain-related concerns coupled with the strain on digital tools has led to increased dissatisfaction among homeowner clients.
A combination of severe events, increasing prices and supply chain-related issues conspired to make 2022 the worst financial year for homeowners insurance providers. This—coupled with the strain on digital tools designed primarily to help the industry respond more quickly and efficiently—has led to increased dissatisfaction among customers, according to a recent study by J.D. Power, the “2023 U.S. Property Claims Satisfaction StudySM."
“The p-c industry playbook for the past few years has been to invest heavily in digital solutions that streamline the claims process for customers, while reducing costs and improving efficiency for carriers," said Mark Garrett, director, insurance intelligence at J.D. Power. “However, the longer cycle times have made it increasingly difficult to keep customers informed via digital channels and limit their need to contact their insurer with questions."
The study, which is based on responses from over 5,000 homeowner insurance customers who filed a claim between December 2021 and December 2022, found that while the overall satisfaction rating for the industry improved 3 points (on a 1,000-point scale), eight insurers' rankings declined. Nine improved year over year.
Insurers with the largest increases in satisfaction were able to limit their customers' need to contact them for information, a key difference between brands that had improved scores and those that had declined, according to the study. Additionally, companies that had improved the most were also able to keep the interactions with their customers streamlined, with only one or two representatives involved.
The study also found that satisfaction is notably lower—approximately 60-70 points—when customers who have indicated a preference for interacting with their insurer via phone or in-person are compelled to use digital tools.
Further, the average claims cycle time—the amount of time from reporting the claim to finished repairs—is now 22 days, more than four days longer than a year ago and a week longer than what was reported in the 2021 study. The delays are even longer for those with multiple payments. Customers say they received the final claim payment after 31.5 days on average, which is nearly a week longer than a year ago. The increases have been driven by a combination of damage severity and continued delays getting the materials needed to complete repairs.
Also noted in the report is that “the increase in severity has driven down digital claim reporting as lower-severity claims are more likely to be reported digitally," Garrett said. “In fact, this is the first year J.D. Power has ever seen declining use of digital claims reporting, digital used as a primary channel for status updates and for submitting photos that were used for the estimate."
“This is a worrying sign for the industry, as digital tools are apparently not meeting customer needs," he added.
Nevertheless, there are steps insurers can take to improve customer satisfaction for longer, more complex repairs, according to the study. These include offering options for receiving status updates; providing accurate claim length expectations; limiting customer-initiated requests for information; and making representatives immediately available.
Olivia Overman is IA content editor.