At a time when many homeowners are not be happy with their mortgages or the economy, insurers can be proud that their customers are increasingly happy with their homeowners policies.
For the first time in five years, overall satisfaction with homeowners insurance has significantly increased, driven by favorable customer perceptions of the value of their policies, according to the J.D. Power and Associates 2009 National Homeowners Insurance Study, released yesterday.
In its ninth year, the study, based on responses from more than 12,900 homeowners insurance customers collected between April and June 2009, measures customer satisfaction with homeowners insurance companies by examining five key factors: policy offerings, price, billing and payment, interaction and claims. Insurers then are assigned a point total out of 1,000 possible points.
Amica Mutual (842 points) ranked highest for an eighth consecutive year among homeowners insurance companies, performing particularly well in all five factors. Following Amica are Auto-Owners (817 points), Erie Insurance (813 points) and State Farm (805 points). USAA, because it provides insurance only to U.S. military personnel and their families, was not included in the rankings, but achieved a score of 900.
Overall satisfaction with homeowners insurance companies in 2009 averages 773 points, which is a 21-point increase from 2008. J.D. Power says the increase is primarily attributable to substantial improvements in the price, policy offerings and billing and payment factors. In particular, satisfaction with price has improved most notably—increasing by 46 points from 2008.
Contributing further to improved perceptions of policy value are shifts in the perceived prevalence of discounts. The percentage of policyholders who reported receiving discounts increased in 2009 to 84% from 81% 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 received discounts are significantly more satisfied than those who either did not receive discounts, or are unsure of the discounts they received.
"To maximize the lift in satisfaction that discounts may bring, 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."
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.
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