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Amid rising cycle times, insurance costs digital communication remains best way to reach customers

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J.D. Power has found that digital communication has become the key to maintaining customer satisfaction throughout the claims process, especially as repair cycle time has doubled in the past two years, currently at 23.1 days.

According to the J.D. Power 2023 U.S. Claims Digital Experience Study, released on Tuesday, many insurers continue to struggle with delivering “a truly seamless digital experience” resulting in overall satisfaction at 854, down three points from 2022.

The study examines the functional aspects of desktop, mobile web, and mobile apps based on four factors — visual appeal, clarity of the information, navigation, and range of services. It’s conducted in collaboration with Corporate Insight, a provider of intelligence and user experience research. J.D. Power surveyed 3,184 auto or home insurance customers from June-October 2023 who filed a claim in the past 12 months.

“Across all of our insurance claims experience studies, we find that the more insurers can do to manage expectations, keep customers updated, and make it easy for them to manage the claims process without a lot of effort, the more satisfied customers become — even when repair cycle times are longer than ever,” said Mark Garrett, J.D. Power director of global insurance intelligence.

“Customers have an expectation that using digital tools will create efficiencies in the process and keep them informed throughout their claim but many insurers struggle to meet those expectations. Only 41% of customers ‘completely agree’ both expectations were met. Whether it is making the claim, submitting photos, or communicating with claims staff, there are still bumps along the digital road. Notable, too, is that only 35% of customers said the estimation process was ‘very easy.'”

Alternatively, when those experiences go well, satisfaction is positively affected. Personalized text messages, status updates via mobile apps, and providing guides to help claimants understand estimates can dramatically improve that experience without significantly raising customer service costs for insurers, J.D. Power found.

However, many customers still indicate they need to pick up the phone to track down a status update, often resulting in having to repeat information to a representative, which negatively affects the overall customer experience.

“Perception is everything when customers are going through an insurance claim,” said Michael Ellison, president of Corporate Insight. “If it feels like the insurer is proactively managing the process and making it efficient and easy to communicate, customers come away with a very satisfying experience. Effective use of digital channels delivers that high touch, personalized experience, and digital leaders are finding they can better manage customer engagement, increasing customer satisfaction and retention when they get the formula right.”

Key findings from this year’s study include:

    • “One-third of claimants still need to call an insurer following digital updates: Overall customer satisfaction with the digital claims experience is highest when claimants receive an email, text, or mobile app update that answers all of their questions. However, 33% of claimants say they needed to contact their insurer to ask additional questions following a digital update causing overall satisfaction to fall 78 points on a 1,000-point scale;
    • “Easy digital experience drives satisfaction and loyalty: Among customers who state that claim reporting, estimation, and settlement processes were all ‘very easy,’ satisfaction is 948 and 86% of those customers say they ‘definitely will’ renew their policy. Satisfaction and renewal rates fall to 895, with 69% of those who state some of those processes were very easy. Among those who state none of them were very easy, satisfaction is 799, and 41% say they ‘definitely will’ renew with the same carrier;
    • “Few insurers manage to deliver all benefits of a digital experience: While most claimants agree that their insurer’s digital tools deliver on at least one element of a comprehensive digital experience, 35% agree that their insurer is hitting the mark on three main criteria —efficient claim process, keeps customers informed, and reduces time spent on the phone; and
    • “Repeat photo and information submission requests sap customer experience: Overall customer satisfaction scores among the 58% of insurance claimants who only needed to submit photos of their damaged property once is 875. That score fell to 837 when they needed to submit photos two times and 806 when they needed to submit photos three times or more.”

S&P Global Market Intelligence said in a November blog post that a more digitally-led insurance customer experience exists is most on the rise in Asia, according to Rob Sims, managing director and partner with Boston Consulting Group’s insurance practice.

“The players who are really being successful are investing heavily in their digital capabilities but also in their agents,” Sims told S&P.

Overall, S&P found that the use of artificial intelligence is set to impact every part of the insurance value chain including products, marketing, underwriting, and claims with one of the largest impacts being in customer service.

S&P noted that geopolitical, macroeconomic, and environmental instability are among the challenges facing the insurance market today in addition to reinsurers raising prices and shrinking coverage throughout 2023, leaving insurers with more risk and volatility. All of these results are “conspiring to push up claims costs and make investment returns unpredictable.”

As growth in premiums allows insurers to afford the increase for now, the question is how long this will continue as “reinsurance prices are rising faster than insurance prices generally around the world,” Mohammad Khan, partner and head of general insurance at UK-based PwC, told S&P.

In personal lines, insurers have struggled to charge adequate premiums, particularly in the US, where pricing is regulated by state. The challenges in this segment have been “a lot more acute” than in commercial lines, Bellizia noted, adding that double-digit rate increases are now earning in, and combined ratios have started to fall.

As insurers are paying more attention to their underwriting without accounting for reinsurance benefits, Guru Johal, lead partner for global specialty and reinsurance markets at Deloitte, added, “The use of data and technology and modeling becomes even more important.”

He noted better modeling is needed for man-made catastrophes and cyber risks.


Featured image credit: Wasan Tita/iStock

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