July 13, 2015 by Canadian Underwriter
Treatment of drivable claims – when a car is damaged, but still drivable – is a key factor fuelling polled Canadian drivers’ increasing dissatisfaction with the auto insurance claims process, note survey results released Monday by J.D. Power.
Drivers taking part in J.D. Power’s 2015 Canadian Auto Claims Satisfaction study voiced they are significantly less satisfied with their auto insurance claims process in 2015 than in 2014. The study is based on responses from more than 2,500 auto insurance customers in Canada who settled an auto insurance claim (excluding only glass/windshield damage or stolen vehicles) within the past 12 months, notes a statement from J.D. Power.
Now in its third year, the study measures customer satisfaction with the claims process – which, depending on the complexity of the claim, can include first notice of loss (FNOL), service interaction, appraisal, repair process, rental experience and settlement – for auto physical damage loss.
Respondents report that repairs are less likely to be completed when promised in 2015 compared to 2014 – 80% versus 83%, respectively – underscoring the need for insurers to better manage repair-timing expectations. Just 18% of claimants with a drivable claim say the claim took a shorter amount of time than expected in 2015, down from 21% last year.
Two factors drove the 19-point drop in satisfaction with the handling of drivable claims in 2015: claimants satisfaction with FNOL, down by 26 points, and settlement, down by 17 points.
In all, 48% of claimants with drivable claims in 2015 are first-time claimants, among whom overall satisfaction is lower than among repeat claimants (790 versus 800, respectively). Overall satisfaction is down among claimants with drivable, repairable non-tow claims (-19 index points); repairable tow claims (-5 index points); and total loss claims (-12 index points).
In addition, J.D. Power notes the time to receive final settlement payment has increased in 2015 from 2014 – 15.5 days versus 14.2 days – again negatively impacting satisfaction. That said, the company reports that more claimants are negotiating their settlements in 2015, up to 17% from 13% in 2014.
J.D Power reports that the handling of drivable claims, accounting for 62% of all claims, is the primary cause of overall claimant dissatisfaction in 2015. Satisfaction decreased a significant 16 points to 782 (on a 1,000-point scale) in 2015 compared to 2014.
The company emphasizes that ensuring a claimant’s actual settlement is aligned with his or her expectations is the most influential Key Performance Indicator (KPI) impacting the overall claimant experience. But Canadian insurers have considerable ground to make up in the area of effectively managing customer expectations, by effectively explaining the process and providing accurate timeframes for repairs and settlement.
“To help get customers through the stress of it all, it’s vital that insurers clearly explain the claims process so they know what to expect. One way this can be accomplished is by providing a reasonable and accurate timeframe for when the repairs will be completed,” Valerie Monet, director of the insurance practice at J.D. Power, says in the statement. “Providing an explanation of the process can improve satisfaction with the overall claims experience and also reduce the need for negotiations between the claimant and insurer later in the process.”
Other survey findings include the following:
• 10% of claimants receive a settlement that is not in line with their expectations, and there has been no annual improvement in this top KPI;
• 50% of claimants contact local agents/brokers during the FNOL process, but about 20% of these claimants are redirected to their insurers by local agents/brokers, negatively impacting satisfaction;
• 80% of highly satisfied claimants (overall satisfaction scores of 900 or more) say they “definitely will” renew their policy, and 78% say they “definitely will” recommend their current insurer; and
• only 13% of displeased claimants (scores of 549 or less) say they “definitely will” renew their policy and only 4% say they “definitely will” recommend their current insurer.