Seeking Satisfaction

Traditionally, commercial insurers have relied upon insurance brokers to manage customer relationships. Risk managers now are looking for both parties – their insurers and their brokers – to work together to meet their needs.

J.D. Power’s 2014 Large Business Commercial Insurance Study, released in early February, examines the performance of large business commercial insurers and brokers, and highlights best practices that are critical to satisfying large business insurance customers.

Brokers – who are independent and typically represent multiple insurance providers – often are the most frequent point of contact for customers for service-related interactions. Yet the study finds that customer satisfaction is notably higher when insurers are involved during service interactions, compared with service interactions that are exclusively with the broker (865 versus 769, respectively, on a 1,000-point scale among property customers).

The large commercial insurance market is a large but unique niche for which there is very limited information available on how customers rate their satisfaction with brokers and insurers. With no benchmark or industry-wide baseline for customer satisfaction, the first-ever such study seeks to provide an independent and objective measure of overall satisfaction among large business insurance risk professionals in the U.S. and Canada.

The study is based on responses from almost 1,000 risk professionals or employees of organizations who provide oversight or are members of their organization’s risk management team.

Organizations included in the study have at least US$100 million in annual revenue or operating budget, and have purchased commercial property, workers’ compensation or auto insurance from one of the insurers or brokers included in the study. More than one-third of customers surveyed have more than 10,000 employees, more than three-fourths of the businesses have more than 10 physical locations, and 81% realize annual revenue amounts of US$500 million or more.

MEASURING SATISFACTION

The study measures customer satisfaction with commercial property, workers’ compensation and auto insurers based on five factors: interaction; program offerings; price; billing and payment; and claims. Satisfaction with brokers is measured based on four factors: ease of contacting broker; reasonableness of fees; advice and guidance in selecting program offerings; and timeliness of resolving contact.

Interaction

Of the factors measured in the study, interaction is consistently a large driver of overall customer satisfaction. It is the second most impactful factor across product lines, contributing to nearly one-fourth of the overall index model in each line. Within each product line, program offering is the leading driver of satisfaction among property insurance customers, while price is the leading driver among auto insurance customers.

Key performance indicators

In addition to quantifying the factors that most influence overall satisfaction, the study provides valuable insights regarding the service practices – or key performance indicators (KPIs) – that have the most influence on customer satisfaction. This analysis of KPIs focuses on service practices that insurers and brokers can incorporate into their business models in order to increase customer satisfaction.

Ultimately, these insights can foster greater collaboration and discussions among customers, insurers, and brokers, and lead to stronger, mutually beneficial business relationships.

KPIs establish the relationship between the subjective impressions of the end-customer (such as courtesy, knowledge and ease of contacting) that determine the index scores and objective metrics (such as time, frequency and cost) that are behaviour-based and actionable for insurers and brokers to integrate into their performance improvement initiatives.

The study identifies 11 KPIs that have the greatest impact on satisfaction, and, hence, are critical to a satisfying experience for large business commercial insurance customers. Customers who say their insurer or broker delivered on each KPI were more satisfied; the impact on satisfaction when a KPI is not met shows a significant drop in customer satisfaction. The 11 KPIs centre on three core servicing principles:

• Limiting issues: Limiting customer-reported issues – either as a result of errors that occur during billing or problems during the renewal process – is an important performance indicator that underscores how essential it is that insurers provide accurate information and ensure the renewal process is free from errors.

• Understanding a customer’s business: Two KPIs emphasize the importance that customers place on insurers’ and brokers’ understanding of their businesses and adding value by becoming partners in their organizations. Ensuring flexibility when designing and implementing insurance programs and making sure insurers and brokers “completely” understand a customer’s specific business needs are two KPIs that significantly impact the customer experience. Making sure the broker “completely” understands the business’ needs is a leading KPI that brokers can deliver to provide a satisfying experience among broker-served customers. More than four out of five (84%) brokers meet this KPI. However, there is a significant 228-index point decline in satisfaction among customers who report that their broker partially or does not understand the business’ needs compared with customers who say their broker understands their needs (890 versus 662, respectively).

• Communicating effectively: It is vital that information be shared with customers, especially regarding changes to policy coverage or pricing. Providing in-person interactions and making sure insurers are involved in service and claims processes are important KPIs that allow insurers and brokers to communicate with customers.

INSURER-SPECIFIC DELIGHTS – PROPERTY

The study identifies five KPIs among property insurance customers that are critical to providing them with a satisfying experience. These KPIs focus on limiting errors and problems, as well as making sure an insurer is involved in service interactions and claims management. Limiting customer-reported problems during a renewal is the most impactful property-related KPI.

Insurers are delivering on this KPI at a high rate – 93% of customers say they did not experience issues during the renewals. But satisfaction erodes by a significant 159 points when customers experience issues during the renewal process.

In contrast, only 56% of customers indicate their insurer is “completely” flexible when designing and implementing programs – another impactful property-related KPI – and satisfaction among these customers is 877.

However, satisfaction declines by a significant 138 points when customers perceive that their insurers are not completely flexible when designing and implementing programs.

There is a strong relationship between satisfaction levels and loyalty and advocacy. Among property insurance customers who are “pleased/delighted” (overall satisfaction scores of 800 or higher), 62% say they “definitely will” renew with their current insurer and 80% say they “definitely will” recommend their insurer to family and friends.

In contrast, only 22% of customers who are “indifferent/displeased” (scores below 800) say they “definitely will” renew and 26% say they “definitely will” recommend their insurer (see upper graphic on page 32).

HIGHEST OVERALL CSI AND FACTOR SCORES: TELECOM AND UTILITIES

• Overall property insurance satisfaction is highest among customers in the telecom and utilities industry (890, see lower chart on page 32) and is lowest among customers in the accommodations, food services, arts, entertainment, retail and recreation industries (778).

• Price and coverage options are among the main reasons for cho
osing a property insurer across all industries.

• 77% of telecom and utilities customers indicate their insurers met flexibility demands when designing and implementing insurance programs – the highest percentage in the study – compared with only 48% in the transportation, warehousing and waste management industries.