28 Nov 2017

How to Earn Homeowners Insurance Satisfaction

By: John Baker

How to Earn Homeowners Insurance Satisfaction

It's one thing to wish for customer satisfaction. Quite another to earn it. No wonder satisfaction has become the subject of countless marketing strategies and think pieces, especially as the marketing focus across industries has shifted from product to experience.

In home insurance, however, the perennial challenge just got a little clearer thanks to a recent study from J.D. Power on home insurance satisfaction. Let's look at the highlights.

There's good news and bad news

Let's start with the good news. In the U.S., homeowners and renters are more satisfied with their insurance now than ever, scoring an all-time high of 808 (homeowners) and 834 (renters) on a scale of 1,000.

The problem is, part of that satisfaction stems from "a multi-year run of declining catastrophic losses and relatively stable pricing," which are due for an upset since Harvey and Irma came to visit. Total damages are expected to exceed $150 billion, with insured property losses from the two events ranging from $35 to $45 billion combined — to say nothing of profit strain. "Harvey and Irma cost companies around $20 billion in lost business," according to Moody's Analytics.

Suffice it to say, we're no longer on a streak of declining catastrophic losses.

Two weaknesses

On that backdrop, J.D. Power noted that "the areas where they consistently see the lowest satisfaction scores are price and direct customer service."

In the aftermath of the two hurricanes, both areas are particularly vulnerable. Many carriers will need to raise rates. And with a high volume of claims to manage, it will be harder than ever for service teams, which are finite, to deliver high-quality, personal, direct customer service.

And the trouble isn't limited to customers who've experienced hurricane losses themselves. Stories of dissatisfaction spread, which can cause dissatisfaction to spread as well. "The risk to customer satisfaction in the wake of catastrophic events transcends those directly affected," said J.D. Power's Robert Lajdziak. If your image suffers, so will satisfaction across your pool.

Two crucial strategies

  1. Educate your customers. You can diffuse a lot of dissatisfaction simply by making the facts clear and understandable to insureds. J.D. Power noted that satisfaction is 92 points higher for those "who understand their policy and the details of what it covers," as compared to customers "who say they do not fully understand their coverage." Yet only 48 percent of customers said they do understand. There's a huge opportunity for improvement here.
  2. Engage in multi-channel, direct and live communication year-round. For the long term, start making periodic contact with your customers all year long via direct and live channels. Doing so has been shown to achieve "the highest levels of customer satisfaction," J.D. Power found.

One last note

There's an elephant in this room, and its name is insurtech. Startups are working hard to "carve out a slice of the home insurance marketplace," J.D. Power said, and investors have their back. Insurtech has raised over $7.1 billion in the last five years.

Momentum is growing for their offerings, which include lower premiums, self-service interactions and  technological advancement. Almost 30 percent of millennials who know about the startups say they will definitely or probably purchase from them in the future.

The moral of this story? Now is the time to generate your own momentum. Silvervine Software is the low risk, high reward policy administration system that can position you for the future. Request a demo to learn more.

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