Study: Customers Happier with Homeowners Insurers

For the first time in five years, customers are significantly happier with their homeowners insurer than they were in the past, according to market research firm J.D. Power and Associates 2009.

In its newly released survey, the National Homeowners Insurance Study, Powers says overall satisfaction with homeowners insurance companies averages 773 on a 1,000-point scale in 2009–increasing by 21 points from 2008. The increase is attributed to better pricing, policy offerings and billing and payment factors.

In particular, satisfaction with price has improved most notably–increasing by 46 points from 2008.

The survey measured customer satisfaction with homeowners insurance companies by examining five key factors: policy offerings; price; billing and payment; interaction; and claims.

Contributing further to improved perceptions of policy value are shifts in the perceived prevalence of discounts. The percentage of policyholders who report receiving discounts has increased in 2009 to 84 percent from 81 percent in 2008. Of the 27 insurance companies included in the study, 10 have experienced notable increases from 2008 in the proportion of their customers who report getting discounts. Policyholders who receive discounts are significantly more satisfied than those who either do not receive discounts or are unsure of the discounts they receive.

“Insurance companies must clearly inform customers of the number and types of discounts they are receiving,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “Even if a customer’s policy doesn’t change, satisfaction may improve by more than 90 points when they’re informed of the discounts they qualify for and are getting, compared with when they have no awareness of the discounts.”

Ranking Insurers
Amica Mutual ranks highest for an eighth consecutive year among homeowners insurance companies, performing particularly well in all five factors that contribute to overall customer satisfaction. Following Amica in the rankings are Auto-Owners, Erie Insurance and State Farm, respectively. USAA, an insurance provider open only to U.S. military personnel and their families and therefore not included in the rankings, also achieves a high level of customer satisfaction.

The study finds that more than eight in 10 customers report bundling multiple policies with their homeowners insurance company. Satisfaction with insurance companies’ policy offerings increases with each additional policy purchased, with satisfaction averaging more than 170 points higher among customers with four or more policies with their insurer, compared with customers who hold only a homeowners policy with their insurance company.

“Keeping homeowners insurance customers well satisfied may pay dividends, as these customers are very likely to purchase additional insurance policies and other financial products from their insurer,” said Bowler.

The study also finds that making improvements in overall satisfaction may have a strong positive impact on renewal and recommendation rates. For example, improving overall satisfaction from an average of 750 to 800 may result in a 10- to 15-percentage-point increase in the proportion of customers who say they “definitely will” renew their policies. Similarly, this improvement in satisfaction may also result in a 10- to 15-percentage-point improvement in the number of customers who say they “definitely will” recommend their insurer to others.

Nearly 13,000 insurance customers participated in the study.

Source: J.D. Powers & Associates