Customer experience continues to be a significant factor in the insurance industry. Impacting not only customer retention and satisfaction levels, but also bottom lines, insurers can make great strides in differentiating themselves simply by ensuring the quality of their customer service.

While this may not be groundbreaking news to most, J.D. Power and Associates released a new study today revealing that the service experience has a greater impact on employer satisfaction with their primary health insurance carrier than cost management, which may comes as a surprise to some given the continued rise in health insurance premiums.

In its report, "2010 U.S. Employer Health Insurance Plan Study," J.D. Power looks at overall satisfaction of small business owners, employer benefits administrators and HR executives with contracted health plans and pharmacy benefits managers. The inaugural study measures five key factors that affect employer satisfaction with carriers, which—in order of impact on the overall experience—are:

            1.            Employee plan service experience

            2.            Account servicing

            3.            Product offering/product design

            4.            Problem resolution

            5.            Cost/cost management

J.D. Power's study finds that, in general, employers express relatively low levels of satisfaction with their primary health insurance carrier. Overall satisfaction averages 611 on a 1,000-point scale—lower than the already-low levels of satisfaction among health plan members in J.D. Power's "2010 U.S. Member Health Insurance Plan Study." However, the firm notes that CIGNA, Kaiser and other regional health plans perform rather well in the employer study.

"Clearly, there is plenty of ground to be gained in terms of improving the employer experience," says Rick Millard, senior director of the healthcare practice at J.D. Power and Associates. "Employers aren't just looking for cost management. As in similar industries with low satisfaction levels, cost diminishes in importance when other aspects of the service experience are improved—which could have a huge impact, given how difficult it has been for health plans to contain costs."

The study finds that the incidence of problems with health carriers is relatively high, with 79% of employers reporting experiencing a problem or issue with their provider during the past 12 months. In comparison, in another industry in which J.D. Power measures satisfaction, approximately one-third of small business banking customers report having experienced a problem with their primary bank during the past year.

"Given the high incidence of issues requiring employers to contact their carrier, the efficiency of the problem resolution process is a highly critical aspect of their overall experience," says Millard. "More than 80% of employers that contact their carrier do so because they have a problem or issue to address, and for those that experience a problem, its resolution becomes the most important aspect of their overall carrier experience."

The study also finds that 61% of employers have used their health provider for five years or less. Most employers indicate that lower rates or the physician network are the most important reasons for selecting their current primary health insurance carrier.

"While most employers haven't actually switched carriers during the past five years, nearly one-half have said that they actively investigated switching," says Millard.

"However, 60% say they find it at least somewhat difficult to switch, which indicates that many employers may be less than satisfied with their carrier, but are prevented from switching because of issues such as limited choices and time constraints."

The study—based on responses from nearly 4,800 employers and conducted online in February and March 2010—includes performance by carrier for Aetna, CIGNA, Humana, Kaiser, UnitedHealthcare and WellPoint/Anthem. Aggregate performance of other regional health plans and not-for-profit Blue Cross Blue Shield licensees also were assessed for comparison purposes.

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