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04:00 PM
Kathy Burger
Kathy Burger
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Insurance Customers’ Perceptions of Experience, Performance Really Matters -- for Better and for Worse

Property/casualty insurers rank relatively high on Forrester Research's fifth annual consumer advocacy scorecard, but carriers should be concerned about consumers' perceptions of financial institutions' customer advocacy.

SOME MIGHT CONSIDER it damning with faint praise, but consumers consider insurance companies to be better than banks when it comes to the concept of customer advocacy. That's according to Forrester Research's fifth annual consumer advocacy scorecard, which was published last month in conjunction with Forrester's 2008 Financial Services Forum. Of the 25 highest-ranking institutions in the study, 14 are insurance carriers, one is an "independent financial advisor" and another is an "independent insurance agent." No. 1, for the fourth year in a row, is USAA; also in the top 10 are AAA, State Farm and Allstate (closely followed by Farmers Insurance, American Family Insurance, Safeco, Travelers and Nationwide).

The rankings -- based on whether or not consumers agreed with the statement, "My financial provider does what's best for me, not just its own bottom line" -- show an overall decline in customers' perceptions of their financial institutions. And perception is the significant concept here, according to State Farm operations VP and long-time industry observer Bill Pieroni, who was a featured speaker at the Forrester event. "The banking [credit] crisis has hurt banks'" images in the public, he stated. "That's why perceived delivery of value matters more than what is actually done. There is a strong correlation between what you really deliver and what the customer perceives." When it comes to matters of customer experience and retention, "Don't just focus on your own marketing and goals," Pieroni warned, arguing that, for the most part, financial institutions "don't spend enough time understanding how they are perceived."

He suggested that personal lines P&C companies' strong showing in the Forrester ranking reflects the fact that this segment has, in fact, "invested in improving experience delivered and perceived. Real growth is slowing, so we're seeing a concerted effort to deliver an unrivaled customer experience."

The industry also has been fortunate that the past couple of years have been relatively mild, in terms of catastrophe-related claims. But this spring's storms, floods and fires will shine a bright spotlight on the ways carriers deal with their policyholders' needs and expectations. Insurers have dodged a couple of bullets -- avoiding the fury of both Mother Nature and the subprime mortgage mess -- but when perception is reality, things can change very quickly, especially in today's YouTube-influenced business environment.

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

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