Property Claims Satisfaction Continues to Improve: J.D. Power

According to the recently released results of the J.D. Power 2014 Property Claims Satisfaction Study the best way to keep homeowners happy during the claims process is to keep them apprised from start to finish.

Satisfaction among homeowners who filed a claim on their homeowners policy between April 2012 and January 2014 averaged 840 on a 1,000-point scale, which was an increase from 836 in 2013.

This is the second consecutive year that J.D. Power found a steady increase in the overall satisfaction ratings among homeowners making property claims. The study claims that the rise in satisfaction is due to the fact that insurers have drastically improved communication with claimants during the claims process, starting from the first notice of loss (FNOL).

Jeremy Bowler, senior director of the insurance practice at J.D. Power summed up the findings in a press release,

“Starting at the time of first notice of loss, it is crucial for insurers to keep claimants informed of their claim, the estimate of damages, the settlement amount, when work will begin and when it will be completed. When major storms hit and insurers have to rely on third parties to assist in managing the large number of claims, service levels often deteriorate fast as each insurer has their own processes and approval requirements. This can sometimes lead to significantly extended claim cycle times.”

The report found that homeowners who filed a non-catastrophic claim last year were usually given a complete explanation of their coverage when they initially reported their loss. Insurers also notified claimants of what damages were covered by their policy and settlements were paid four days faster than 2013.

According to the study 15 percent of claims used a third-party damage inspection firm, which was a decrease of 5 percent from 2013 results.

Key Findings of the Report

The report found that overall satisfaction with non-catastrophic claims has gone up 11 index points when compared to 2013. While overall satisfaction was up in four of the five measured factors, the biggest bump came in the settlement factor which went up 4 index points.

Insurers that effectively communicate with their customers during the claims process are less likely that a claimant will request that their claim is escalated to a supervisor. Once a supervisor is involved the satisfaction level drops over 160 index points.

How quickly insurers respond to a claim is a good indication of satisfaction. The report found that if the insurer provides settlement terms to a claimant within a day of first notice of loss, a mere six percent of claimants would escalate to a supervisor. Escalation rates increase to 13 percent if it takes a week to get back to the claimant and 18 percent if it’s more than a week.

Surprisingly, Generation Y claimants are much more likely to escalate a claim than Baby Boomers. The younger set will escalate almost a quarter (23 percent) of claims compared to only 8 percent for Boomers.

The Best of the Best

Amica Mutual was the big winner with a score of 898 on a 1,000-point scale. This is the third year in a row that Amica has come out on top. Erie Insurance came in second with a score of 877, Nationwide was third at 858, and Auto-Owners Insurance (854) and Farmers (845) rounded out the top five.

When it comes to dissatisfaction in the claims process, catastrophic losses received lower scores when compared to non-catastrophic claims.

This is the 7th year of the Property Claims Satisfaction Study. The study measures customer satisfaction with the property claims experience. The study takes into account five different factors, settlement; FNOL; estimation process; service interaction; and finally the repair process.