Property insurers are looking at yet another "worrying sign" | Insurance Business America
Digital claim reporting dropped in 2022, and it’s a “worrying sign” for insurance companies. That is according to JD Power.
Increasing cycle times have made it harder for insurers to keep customers up to date on their claims through digital channels, while an increase in severity has driven down digital claims, Mark Garrett, director, insurance intelligence at JD Power has warned.
Furthermore, according to Garrett, this could be a sign that the tools are “not meeting customer needs”.
“In fact, this is the first year JD Power has ever seen declining use of digital claims reporting, digital use as a primary channel for status updates and for submitting photos that were used for the estimate,” Garrett said on the release of JD Power’s 2023 US Property Claims Satisfaction Study.
A costly year for insurers – and a painful one for some customers
Insurers have faced up to a costly year, with major catastrophe losses and inflation posing a financial headache; JD Power said it was the worst year financially for homeowners’ carriers in a decade.
Natural catastrophes – like wildfires in California and Hurricane Ian in Florida – have driven a torrent of severe property claims. Cat losses for 2022 hit $115 billion.
For struggling property owners looking to get back on track, digital may not be delivering. Supply chain issues, meanwhile, are prolonging the claims cycle.
“Whether it’s a dip or a plateau [in digital reporting], the big voice of the customer feedback we got here is ‘if I tell you, I prefer to talk to people, and you’ve tried to shuffle me into a digital channel, you’re going to find I’m not very satisfied because you didn’t meet me where I wanted to be met in my experience’, and that’s the biggest drag on satisfaction,” Martin Ellingsworth, JD Power executive managing director, P&C Insurance Intelligence, told Insurance Business.
There’s also the question of whether more severe claims can be managed with a digital footprint, with elements like hidden damage not necessarily possible to be assessed from a picture. Policyholders may think they’ve supplied what the insurer asked for, only to be told that further assessment is needed.
“That resetting of expectations, the drawing out of the process of connecting with the right people, and then setting a clear path forward on what’s going to happen next, that just burns clock time and frustrates people,” Ellingsworth said.
There is a “silver lining”, according to Ellingsworth. Customers that want digital and had a claim that could be handled using such tools were typically very satisfied.
However, he said: “Trying to force a digital experience on to an analogue desire is just a really bad bet.”
Which insurers ranked top for property claims satisfaction?
Erie Insurance came out on top in JD Power’s 2023 US Property Claims Satisfaction Study. Graded out of 1,000, the top 10 insurers by overall customer satisfaction index ranking were:
- Erie Insurance (912)
- Amica (903)
- Nationwide (884)
- The Hartford (883)
- Chubb (880)
- State Farm (880)
- American Family (875)
- Farmers (873)
- Liberty Mutual (870)
- Allstate (868)
Do insurers need to be rethinking a digital first approach?
Digital tools may be “stretched”, according to JD Power, but that shouldn’t make insurers rethink using them.
Rather, they should “double down on the customer first approach”.
“You could listen to what customers say they want and then adapt the digital tactics to different tasks in the process, that might be the best practice,” Ellingsworth said. “[Customers should have access to] people when you need them and robots when you want them.”
Speaking from the perspective of a customer, Ellingsworth said: “When I’m getting a status update, you don’t need to have someone call me at all times of the day for that – you could text me, you can email me, you could do a bunch of different activities to give me an update.
“But if I’ve got a problem, I need to ask further questions, digital channels are not necessarily flexible when it comes to going off menu.”
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