Canada’s Home Insurers Undergo Claims Stress Test: J.D. Power

June 6, 2017

A record year for catastrophic disasters, from the Fort McMurray fire to floods in Quebec, have put Canadian home insurers to the test in 2017. According to the J.D. Power 2017 Canadian Home Insurance Study, a spike in major claims has created significant challenges for insurance carriers, with Western regional carriers as a group experiencing a 10-point year-over-year decline in customer satisfaction with the claims process.

J.D. Powers found that a number of insurers turned the situation to their advantage, or their customers’, and still provided laudable customer service.

“Catastrophic claims on the scale of what we’ve been seeing over the past few years in Western Canada, and over the past several weeks in Quebec, have put a tremendous strain on insurance carrier resources, affecting everything from longer than average claim payment cycles to customers experiencing greater annual premium increases,” said Valerie Monet, director of the insurance practice at J.D. Power. “Though the immediate effect of these spikes in claims is felt most by regional carriers, some leaders in the industry have found ways to buck that trend by providing truly great customer experiences even in periods of significant operational stress.”

In the overall relationship customers have with their insurer, claims represent a small component of customer satisfaction since not every customer files a claim. So, while claims satisfaction may be slightly down for regional carriers as a result of increased claim volume in the West, customer satisfaction still has improved overall by 37 points (on a 1,000-point scale) due to insurers significantly improving non-claims interactions through their website, local agent/broker and customer service representatives.

The annual study examines customers’ 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 center service representative; and website. Satisfaction is calculated on a 1,000-point scale.

Key Findings

Western regional carriers challenged by Fort McMurray fire: While smaller, regional insurers typically outperform national carriers, claim satisfaction among Western regional carriers as a whole declines 10 points in 2017 to 796 from 806 last year. Conversely, claim satisfaction for national carriers in the Western region has increased 22 points year over year to 805. These changes in satisfaction may reflect capacity constraints put on regional carriers operating in Western Canada stemming from the Fort McMurray fire, which was the largest insured disaster in Canadian history.

Disconnect between perceived and actual coverage: It is too soon to assess exactly how the recent floods in Quebec will affect customer satisfaction, but the study does find a disconnect between perceived and actual coverage for flood damage. Nearly half (48 percent) of respondents in Quebec say they have overland flood coverage; however, the Insurance Bureau of Canada estimates only 10-15 percent of Canadian homeowners actually have such coverage.

One key is to manage expectations: While overall satisfaction among those in the Western region who have had to make a claim is lower compared to those in the Atlantic/Ontario region and Quebec (773, 789 and 812, respectively), average satisfaction scores for carriers in the West that provided a timeline for the claim process and met that timeline is 823.

“When dealing with losses on the scale of the Fort McMurray fire, the logistical challenges faced by carriers can be overwhelming,” Monet said. “But those companies that follow best practices for proactive customer communications can still achieve superior levels of customer satisfaction. This has huge implications for carriers currently dealing with an influx of calls stemming from the flooding in Quebec—regardless of whether the customer is covered.”

Study Rankings
  • The Co-operators ranks highest in the Atlantic/Ontario region with a score of 794, followed by Economical Insurance (792) and Allstate (784).
  • RSA Insurance ranks highest in Quebec with a score of 842, followed by La Capitale (832) and The Personal (828).
  • Portage Mutual Insurance ranks highest in the Western region with a score of 801, followed by The Co-operators (791) and BCAA (788).

The 2017 Canadian Home Insurance Study is based on responses from 7,422 homeowners insurance customers. The study was fielded in February-March 2017.

Study Rankings
Overall Customer Satisfaction Index Ranking
(Based on a 1,000-point scale)
Atlantic/Ontario Region Power Circle RatingsTM
For Consumers
The Co-operators 794 5
Economical Insurance 792 5
Allstate 784 4
Intact Insurance 782 4
The Personal 781 3
belairdirect 780 3
RBC Insurance 779 3
Region Average 778 3
Wawanesa 775 3
State Farm 771 3
Aviva Insurance 769 2
Travelers 768 2
RSA Insurance 767 2
TD Insurance 761 2
Johnson Insurance 755 2
Quebec Power Circle RatingsTM
For Consumers
RSA Insurance 842 5
La Capitale 832 4
The Personal 828 4
Promutuel 814 4
SSQ General 813 4
Region Average 804 3
Industrial Alliance 800 3
Desjardins General Insurance 798 3
Aviva Insurance 797 3
TD Insurance 792 2
belairdirect 791 2
Intact Insurance 788 2
Western Region Power Circle RatingsTM
For Consumers
Portage Mutual Insurance 801 5
The Co-operators 791 4
BCAA 788 4
Alberta Motor Association 782 4
SGI Canada 781 4
Intact Insurance 775 4
Region Average 763 3
Wawanesa 754 3
TD Insurance 745 2
Economical Insurance 743 2
Peace Hills General Insurance 741 2
Johnson Insurance 729 2
Aviva Insurance 723 2

Power Circle Ratings Legend

5 – Among the best

4 – Better than most

3 – About average

2 – The rest

Source: J.D. Power

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