Homeowners in Canada filing more insurance claims for storm damage: J.D. Power

Year over year, the number of weather-related insurance claims in Canada has increased by 32%, notes the latest edition of the annual J.D. Power 2014 Canadian Home Insurance Study.

Released Thursday, the annual study examines customer satisfaction with their homeowners insurer by examining five factors: interaction; price; policy offerings; billing and payment; and claims, notes a statement from J.D. Power. The study is based on responses from 7,092 home insurance customers, collected March through April 2014.

Overall, 41% of the home insurance claims were for weather-related damage, notes a statement from J.D. Power. When presented with a list of perils included under their homeowners policy, 24% of customers indicate they do not know which perils are included under their policy, and 21% believe, incorrectly, their home is covered for overland flooding.

Despite the increase in weather-related claims, customer satisfaction with their insurance providers – even among those who file a claim – is improving, study results show.

Among customers who filed a weather-related claim, satisfaction with the claims process averages 790 (on a 1,000-point scale), up from 764 in 2013 when 31% of claims were for storm damage. Claims satisfaction among customers whose homes suffered non-weather-related water damage – the second most common type of claim (21%) – averages 808.

“While it may seem contradictory that satisfaction increases when a homeowner files a claim, the claims process is when customers actually see the value of the premiums they have been paying,” Jeremy Bowler, senior director of the insurance practice at J.D. Power, says in the company statement.

“Insurance is a product customers hope they never have to use, but when they do have to, that’s the opportunity for the insurance provider to make good on their promise,” Bowler continues.

Overall customer satisfaction improved nationally to 770 compared to 761 in 2013. Regionally, satisfaction improved by 17 points in the Atlantic/Ontario region to 771 and by 11 points in the Western region to 752, while it declined by 13 points in the Quebec region to 794.

Looking at weather-related claims by region, the Western region has the largest portion (45%) and, despite a 35-point improvement from 2013, the lowest claims satisfaction at 773. The Atlantic/Ontario region has the greatest increase in weather-related damage – up 35% from 2013 – while the average claims satisfaction score in the region has improved by 65 points to 817.

Non-weather-related water damage is nearly as common as weather-related damage in the Quebec region (26% versus 32%), where overall claims satisfaction scores average 787, down by 4 points from 2013.

Other study findings include:

• a larger proportion of customers in 2014 indicate their insurer fully covered everything they thought should be covered, compared with 2013 (87% versus 82%), which significantly increases claims satisfaction by more than 200 points on a national level;
• despite a 10-point increase in the price index on a national level, price continues to be the lowest-scoring factor in the customer experience, due in part to sustained premium increases in the industry (45% of customers indicated they received a premium increase in 2014); and
• among customers who received a premium increase, overall satisfaction is significantly higher when they receive an explanation of the increase (751 versus 703).