Evaluating Consumers' Perceptions of Insurers
While satisfaction with the auto insurance claims process is lower among Gen Y claimants than among their older counterparts, their satisfaction is improving, according to the J.D. Power 2015 U.S. Auto Claims Satisfaction Study. The study measures customer satisfaction on a vehicle owner’s most recent automobile collision claim. Mark Garrett, director of industry analytics for J.D. Power and Associates and the conductor of the study, discusses the results, the process of gathering the survey data and how different generational disparities with customers will affect you.
What is the process for J.D. Power to conduct this survey? And how are insurers involved in conducting it?
What we do with this study is collect about 11,500 interviews of people who had their claims settled within the last six months. It’s a syndicated study, so we gather all the input and independently conduct the research. The insurers are not sending us lists of customers who have had a claim. We work with panel companies to find people who have had a claim and that's something that we're constantly fielding on a quarterly basis. We may touch on 1 million households to find these because claims aren't a high instance type of occurrence.
What we then do is look at the market shares of the companies. We buy a third-party market share list and we try to benchmark the top 30 insurers. Twenty-four companies ended up being eligible, which means they have over 100 completes.
What are some of the key findings this year?
If we start at a high level, one of the most interesting things we saw in the industry was that this is the first year that the industry has not improved. Every year we've conducted this study, we've seen the industry improving, even if it was small incremental improvements. There’s always been a point or five-point increase. What that means is that, yes, the industry was flat, but behind the scenes, there’s interesting stuff going on. Some things improved, some things declined. The first notice of loss process, the initial entryway into filing the claim, went down a little bit year over year. It's interesting because it’s a real point of focus for a lot of insurance companies we talk to. They're always tweaking their models around first notice of loss.
To see that trend down a little was an interesting finding. Some of that may be impacted from changes we’ve seen in our data by certain companies in the industry. What we do with our industry average is weight it to market share. If a brand as big as Allstate makes a pretty big shift in their claim operation, it can have a big impact on the industry average. One other item that might be involved is that the industry just entered into a soft cycle of the market. I’m sure all the carriers are considering where they're applying resources and so forth, and that may have had an influence on this also.
When you drill down into that flat number, were there any differences generationally?
The generational performance was one of the macro trends we saw. Some of the older age groups, the pre-boomer, they trended down slightly. The baby boomer generation was essentially unchanged. And Gen X and Gen Y, particularly Gen Y, improved. What we saw is those improvements were offset by the older generations, which equated to net zero change for the whole industry. But we are seeing improvement with some of the younger generations and seeing more improvement there over the last five years than any other cohort.
There's a couple different ways why they are different. They're coming at it with different experiences and expectations and may respond differently to the process. For insurers, it’s important they understand that it’s not a one-size-fits-all claim operation. You really do need to try to differentiate your service based on these customers. One thing we see in the data is that almost 60 percent of Gen Y has never had a claim before. That compares to 20 percent of baby boomers who have never had a claim. It’s the majority of Gen Y. If you've never had a claim, you don't have that experience of how long the process is going to take, understanding what's going to unfold, what you need to do. That can create a big disconnect right there.
A lot of these customers are unsure if they have rental coverage. A lot of times, you buy your policy and you may not have a claim for a year or two, so you may not remember if you have rental coverage. Thirty-four percent of Gen Y is unsure if they have rental coverage at the time of the claim.
"Gen Y is a little bit more sensitive to things feeling like they're taking a long time."
—Mark Garrett, director of industry analytics, J.D. Power and Associates
We also ask customers how much effort they had to put forth in the claim. It's a 1-5 scale and 5 means "a great deal of effort." We look at 4s and 5s together because that's essentially customers who thought great or pretty good deal of effort. It’s 45 percent of Gen Y-ers said they had to put effort into the claim versus only 18 percent for Boomers. It’s basically three times as high. It can be little things like having to repeat information, if you're not getting a timely call back. We find that these Gen Y-ers' perception of time is a lot different. A baby boomer might be more inclined to wait a couple days for an update or understand it's going to take a while in the shop. Gen Y is a little bit more sensitive to things feeling like they're taking a long time.
Are those younger generations the ones most responsible for using newly available technology, too?
What we're finding is that most recently, when we look at the types of technologies, people who submit photos through mobile apps are most likely to be Gen Y. If we looked at drivable vehicles, we had close to 20 percent of Gen Y using that technology. Whereas it was 6 percent when it came to the boomers. That's helping close the gap a little bit. There’s still a wide gap in the overall scores from Boomer to Gen Y, but I think some of that technology is leading them to being adopters of it, seeing that it’s running smoothly and efficiently.
It's something that executives in insurance companies are thinking about very rigorously. They have to make their bets on the best resources for the future fairly early on. Especially developing the right technologies, it's critical for them to understand this trend in Gen Y versus all the other generations.
Even more critical with this generation is that the least satisfied customer is someone who tries to use a technology-based channel to get updates on their claim (that could be an email, going online, etc.), and the customer still needs to pick up the phone and make a call. That's the worst case scenario. That's the least satisfied customers. People who use technology right and don't need to call, they're the most satisfied. Technology is really an opportunity for great success or great failure.
What are some technologies that are doing well or, conversely, have experienced little success?
When you think about "doing well," it could be either if it’s improving the experience or if people are adopting it. One example is that the customers who are using technology to report their claim are responding well to this but it has a low take rate. We see very low incidences of customers wanting to do that—single digits overall in the study. Part of that is driven by the history of insurance being a trust-based business. Most people, when it comes down to it, they want to have the confidence that someone is directly thinking about it.
Another one is submitting photos through mobile apps. That’s a new technology but a real area where technology has changed the process. One of the positives we've seen out of that is that it's shortened the cycle time of the claim. We're seeing that customers who submitted photos through an app are getting their car back two days quicker because they shortened the whole appraisal process.
Are there areas of the study that are particularly important for collision repairers to pay attention to?
Throughout the claims process, the shop itself is seen by most insurers as an extension of the insurance company. I think part of the issue is exactly who is responsible for what part of the process going on at a given time. One of the things we found is that giving the correct estimates for the times is critical. For shop owners, where they can make the best inroads with the insurance companies is if they can give highly accurate estimates of time the insurance company can pass on to the customer. That's a place where I think, in the process, there has been quite a bit of room to improve to the insurance companies. I think if the shop owners focus on that, that's one of the big things they can do to move themselves up in customer satisfaction.
It's very similar to that example I gave of having to pick up the phone as a customer to find out what's going on with the insurance company. That's a very negative thing. The minute I pick up the phone, I’m far less satisfied. That exact finding we see on the shop side, as well. The shop needs to keep the customer informed and make outbound calls to the customer. When we look at what's important in the repair process, we ask questions like, "Was the vehicle fixed right the first time?" And for the most part, the shop is doing that really well. Fixing the vehicle right is at 92 percent. Getting into that 92 percent, when we look at an accurate time frame given, that was only 79 percent. One in five customers are saying that they were not provided a good timeline. It’s the soft skills where shops can improve.