June 6, 2016 by Canadian Underwriter
Customer satisfaction with homeowners insurance in eastern Canada is improving, while catastrophic events contribute to lower satisfaction in the western provinces, according to the J.D. Power 2016 Canadian Home Insurance Study, released on Monday.
The annual study examined customer satisfaction with their homeowners insurance company by examining five factors (in order of importance): non-claim interaction; policy offerings; price; billing and payment; and claims. The non-claim interaction factor includes three subfactors: local agent or broker; call centre service representative; and website.
The study is based on responses from 7,438 homeowners insurance customers, with satisfaction calculated on a 1,000-point scale, J.D. Power noted in a press release. The survey findings indicated that overall satisfaction in the Atlantic/Ontario region improved to 768 in 2016 from 759 in 2015, while satisfaction in the Quebec region jumped to 797 from 777. Satisfaction in both regions improves significantly in all five factors, with the only exception being price in the Atlantic/Ontario region, which improves by a modest one point.
In contrast, overall satisfaction in the western region dropped to 732 in 2016 from 745 a year ago. Price is the leading cause of the drop in satisfaction, suffering a 23-point year-over-year decline, the release said. Contributing to the decline in satisfaction is that home insurers in the Western provinces have been challenged with significant losses resulting from catastrophic events. While fire-related claims have decreased to 5% of claims in 2016 from 6% in 2013, storm-related claims have increased to 44% from 37% over the same period, the release pointed out. As well, the western provinces are still being impacted by the wind and thunderstorm event that took place in the summer of 2015 in Alberta and Saskatchewan, resulting in $56 million in insured losses.
“The western provinces have had some very severe events in recent years, like the current Fort McMurray wildfire, which have caused significant financial losses for insurers,” said Valerie Monet, director of the insurance practice at J.D. Power, in the release. “When insurers are managing losses, rate increases are common and cost control is a frequent focus. From a customer perspective, price satisfaction hasn’t improved over the years, and data suggests that many insurers have not had time to focus their efforts on improving the customer experience after the upheaval these claims events have had on their business.”
According to the study, the Quebec region has the highest intended loyalty, with 37% of customers saying they “definitely will” renew with their current provider, while 31% of customers in both Atlantic/Ontario and the western regions indicating the same.
In addition, “delighted” customers (overall satisfaction scores of 900 or greater) are less likely to shop for new homeowners insurance; are more likely to renew; and are more likely to recommend their insurer than less satisfied customers. For example, 71% of delighted customers say they “definitely will” renew with their current insurer and 69% “definitely will” recommend their insurer to family and friends. In comparison, only 37% of “pleased” customers (scores of 750 through 899) say they “definitely will” renew with their current insurer and only 27% “definitely will” recommend.
The J.D. Power 2016 Canadian Home Insurance Study can be downloaded at http://canada.jdpower.com/resource/canadian-home-insurance-study.