J.D. Power: Home insurers "miss the mark" when addressing top customer issues

A new study by J.D. Power has found that insurance companies are failing to meet some of the more important expectations their customers have of them.

The 2019 Canada Home Insurance Satisfaction Study found that more than half of customers surveyed said that their insurer failed to deliver on “key performance indicators” – particularly those that the customers rated as most important in relation to price, policy, and service.

The seven indicators of the most important attributes that affect customer satisfaction all received lower average scores than those in less-influential areas of customer satisfaction, J.D. Power noted.

Other key findings of the report include:

• Improvement in customer satisfaction tied to market share gains – Carriers that engage in customer satisfaction initiatives correlate to more favourable top-line results.
• Delighted for the long run – Delighted customers (defined by the study as customers with satisfaction scores of 900 and above, on a 1,000-point scale) typically stay with the same home insurer an average of almost 13 years. These customers are also more likely to serve as “brand ambassadors,” recommending their insurer to family and friends.
• Product improvement presents opportunity – J.D. Power found that improvements in product offerings (i.e., more competitive discounts and more flexible underwriting standards) are areas insurers can use to differentiate themselves from the competition and improve customer satisfaction. Notably, satisfaction is higher when customers receive lesser-known discounts for things like online purchase, association memberships and automatic or full-policy payments versus common discounts for claim-free records, security systems and fire alarms.
• Digital divide – A significant satisfaction score gap was observed between the highest- and lowest-performing insurers in terms of digital capabilities. The highest-ranking insurer scores 850 for offering digital capabilities for insureds; the bottom performer scores just 670

“Insurers who want to increase market share as well as attract and retain customers need to shift focus and improve in areas that most influence customer satisfaction,” commented J.D. Power insurance practice director Tom Super. “Highly satisfied customers have better policy lifetime expectancy (PLE) scores and are much more likely to recommend their insurer to friends or family.”