Auto Insurance Claims Satisfaction: Stable Overall Despite Near-Term Declines

There's been much discussion recently about the importance of the claims experience -- the need for insight, interactivity and personalization across multiple channels. However, the findings of J.D. Power's 2013 Auto Claims Satisfaction Study-Wave 3 indicate that transaction proficiency still is the most important factor in policyholder satisfaction when it comes to auto insurance claims -- especially in the wake of disasters such as Superstorm Sandy.

According to J.D. Power, satisfaction with the auto claims experience held steady in the second quarter of 2013, compared with the first quarter. However, small improvements in satisfaction with repairable claims were offset by significant declines in satisfaction among total loss-claimants. The marketing information services company suggested in a summary of the study results that the declines may be due to the impact of more claims filed in the Mid-Atlantic region after damages from Superstorm Sandy at the end of October 2012 and a nor'easter storm in February 2013.

[Inside the Sandy Claims Response: From the Front Lines]

The study, based on 3,009 responses from auto insurance customers who settled a claim within the past six months, reveals that overall claimant satisfaction has edged up by 2 points to 852 on a 1,000-point scale in Wave 3, compared with 850 in Wave 2 of the study(January - March 2013). In the same period out-of-pocket expenses for repairable claims, such as the deductible and vehicle rental, reportedly dropped to an average of $461 vs. $499 in Wave 2. At the same time, J.D.Power reports, out-of pocket expenses for total loss increased slightly to an average of $600 in Wave 3 from $592 in Wave 2.

"While overall satisfaction is up 2 points overall, and satisfaction in four of the six factors is also up from Wave 2, satisfaction with the appraisal process among total loss claimants declines by 25 points," said Jeremy Bowler, senior director of the insurance practice at J.D. Power, in a press release.

"For total loss vehicles, satisfaction with the claims process has declined by a significant 57 points in the Mid-Atlantic region, which was devastated by major storm events. In that region, satisfaction with the appraisal process declines by 71 points, and satisfaction with the settlement process declines by 76 points," said Bowler.

Underscoring the importance of speed and efficiency in shaping policyholder attitudes, the Wave 3 study found that claimants wait an average of 2.8 days for an insurance appraisal of repairable vehicles -- nearly the same as in Wave 2 (3.1 days). However, according to J.D.Power, the appraisal process for total loss vehicles took longer than in Wave 2 -- averaging 4.8 days, up from 4.2 days.

The study also found it took an average of 5.3 days in Wave 3 to provide claims settlement terms for vehicles that could be repaired -- slightly shorter than 5.8 days in Wave 2. However, the time needed to provide settlement terms for total loss claims rose in Wave 3 to an average of 12.3 days from 10.5 days in Wave 2.

Receiving settlement payments also took considerably longer for total loss claims in Wave 3 than in Wave 2. In Wave 3, receiving a settlement averaged 20.9 days, up by 4.3 days from 16.6 days in Wave 2. However, the time it takes to receive a settlement payment for repairable claims was almost unchanged--14.5 days in Wave 3, compared with 14.1 days in Wave 2.

These findings notwithstanding, insurers should not discount the importance of the overall claims experience in managing their claims operations, according to Bowler. "Our findings highlight how important it is for insurers to efficiently manage their customers through the appraisal process. There are more than 70% of auto insurance claimants who had some form of interaction with their insurer related to an appraisal. Among these claimants, overall satisfaction is 30 points higher than among those who did not interact with their insurer or agent," he said in the study overview.

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Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio