Report: Settlements Key in Overall Insurance Claims Satisfaction

Improvement in how policyholders view their settlements from insurance companies is driving up their overall satisfaction with auto claims, according to the latest study into consumers’ approval levels from J.D. Power and Associates.

The research firm’s U.S. Auto Claims Satisfaction Study, released Monday, found that overall satisfaction jumped six points to 852 points on a 1,000 point scale. The firm used six measurements of satisfaction levels—first notice of loss, service, appraisal, repair process, rental experience and settlement—with the last factor carrying the most weight among all factors.

Total-Loss Claimants Especially Satisfied

Happiness with settlements increased 16 points among total-loss claimants, a major contributor to the rise in overall satisfaction. Satisfaction levels among total-loss claimants carried more significance in the settlements category than repair-based satisfaction because, in total-loss situations, “a settlement check is more often provided directly to claimants,” according to a management discussion paper on the study.

In repair situations, how a policyholder views the settlement amount is less important because “claimant’s primary focus is getting their vehicle back in a condition similar to prior to the accident and not necessarily on making sure the dollar amount seems sufficient.” Also, in such situations, the insurance carrier pays the repairer directly, minimizing the importance of how a policyholder views the fairness of that payment.

Meanwhile, the average total-loss settlement rose by almost $690, buoyed by “increasing used-vehicle values” throughout much of this year, compared with last year.

According to the firm’s Power Information Network, which tracks vehicle sales, the sales of used vehicles averaged $17,700 in January compared with $18,500 by summer, when the price peaked in May and June.

“As used vehicle sale prices increase, the value of the loss settlement also increases,” Jeremy Bowler, a senior director at the firm, said in a statement.

When it came to claims involving repairable vehicles, out-of-pocket expenses played a major part in policyholders’ satisfaction with claims.

Only 4 percent of claimants who did not have to pay beyond their deductible themselves reported that they were unsatisfied with their settlements, while the remaining 96 percent said that the “settlement met their expectations.”

Among those who did have to pay out-of-pocket beyond their deductible, the rate of dissatisfaction increased to 12 percent.

Paying More, Consumers Still Show Satisfaction

Overall, claimants are spending more themselves, with average out-of-pocket costs jumping from $377 last year to $403 this year.

Relating increased consumers’ expenses to the rise in overall satisfaction, firm officials said that the results show “insurers are managing claimants’ expectations more effectively.”

The study found a rise in the rate of claimants reporting that they had be offered adequate options to recieve updates on their claims process, from 61 percent last year to 64 percent this year.

Another study from the firm, focusing on consumers’ happiness their insurance company, highlighted the importance of communication whenever coverage carriers hike their rates.

When measuring overall satisfaction, those who saw rate increases without notice were 61 points less satisfied with their insurer than those who had points of contact before the increase, such as policy reviews, according to the study released in June.

“Whatever the stratagem, having that conversation early is a great salve,” he said.

When it comes to claims, communication is just as important, according to the firm’s latest study.

“Claimants’ perception of fairness is more than just the amount of the settlement,” Bowler said. “Focusing on keeping claimants updated and quickly communicating what will be covered in the claim also have a major impact on their perceptions of how fairly they are treated.”

Auto-Owners Tops Claims Satisfaction Rankings

The firm also ranked insurance carriers based on claims satisfaction levels. The insurers’ top-five rankings, with point values, are as follows:

–Auto-Owners (887 points)
–Amica Mutual and Erie (tied for 876 points)
–Auto Club of Southern California and COUNTRY (tied for 874 points)

Auto-Owners Insurance was atop the list of the country’s leading auto insurance companies for the fifth straight year, scoring 890 points in last year’s rankings. Also last year, State Farm placed second, with 878 points, followed by Amica Mutual, with 865 points and American Family, with 862 points.

The study was based on reports from more than 12,500 auto policyholders who had settled an insurance claim in the past six months.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

No comments yet.

Comment on this article