Thursday, 27 October 2011 17:26

Study Shows Total Losses Rate Less Satisfaction than Repairs

Auto insurance claimants who incur a total vehicle loss are notably less satisfied with the claims experience than claimants who incur a repairable vehicle claim, a new study by J.D. Power reports.

Satisfaction averages 811 on a 1,000-point scale among claimants with a total loss — 42 points lower than among those whose vehicle is repaired, according to the J.D. Power 2011 U.S. Auto Claims Satisfaction Study released Oct 27.

Auto-Owners Insurance scored 890 in overall claimant satisfaction, ranking the highest among all insurance companies for the fourth consecutive year. The following insurance companies round out the top five:

• State Farm: 878 overall claimant satisfaction score
• Amica Mutual: 865 overall claimant satisfaction score
• American Family: 862 overall claimant satisfaction score
• The Hartford: 858 overall claimant satisfaction score

The following insurance companies comprise the five ranked lowest regarding claimant satisfaction:

• Farmers: 804 overall claimant satisfaction score
• Esurance: 800 overall claimant satisfaction score
• Encompass: 789 overall claimant satisfaction score
• Commerce: 772 overall claimant satisfaction score
• 21st Century: 771 overall claimant satisfaction score

This gap is largely due to a lack of satisfaction with the settlement among total loss claimants, with approximately one-half of these claimants citing the settlement they received wasn’t enough to replace their totaled vehicle with a similar make/model vehicle.

“Auto claims resulting in a total loss tend to be more complex, compared with vehicle repair claims, because in addition to filing a claim, claimants also have to purchase a replacement vehicle,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “Ongoing communication and managing expectations are key throughout the entire claims process, as total loss claims take 18.2 days, on average, for claimants to receive payment, compared with just 12.5 days for the return of a repaired vehicle.”

Making the claimant aware of how quickly they’ll receive the settlement and providing a thorough explanation of how the settlement amount was calculated are crucial to improving the overall experience in those instances of total loss, Bowler said.

The study says that insurers can deliver a satisfying experience by addressing three primary needs throughout the claims process:

Communication—Insurers must not only be available when claimants have questions, but must also make the effort to clearly explain the claims process, follow up in a timely manner and keep claimants informed throughout the claims process.

Speed—Insurers must quickly move the claim along from first notice of loss, to the appraisal, to communicating settlement amounts and ultimately paying claimants. Currently, total loss claimants report having to wait an average of four days to receive a settlement offer following damage appraisal.

Fairness—Claimants want to be treated fairly regarding the settlement and avoid surprises during the process, whether caused by unexpected out-of-pocket expenses or not fully understanding what their policy covers in a claims situation.

The study measures claimant satisfaction with the claims experience for auto physical damage loss. Depending on the complexity of a claim, the claimant may experience some or all of the following factors measured in the study: first notice of loss; service interaction; appraisal; repair process; rental experience; and settlement. Settlement is the most important factor in overall satisfaction among both total loss and repair claimants.

“It’s important for customers to examine the settlement offer and, in particular, verify the vehicle content and condition,” said Bowler. “The majority of customers who disputed their vehicle’s valuation most often cited differences concerning comparable vehicles (56 percent), vehicle condition (53 percent) and aftermarket accessories (18 percent).”

New Jersey Manufacturers Insurance Co. and USAA also achieve high levels of customer satisfaction, although they are not included in the rankings due to the closed nature of their respective memberships.

The 2011 U.S. Auto Claims Satisfaction Study is based on more than 11,500 responses from auto insurance customers who filed a claim within the past 12 months. The study excludes claimants whose vehicle only incurred glass/windshield damage or was stolen, or who only filed roadside assistance claims. The study was fielded March through July 2011.

The top 25 insurers surveyed with their satisfaction scores are listed below:

1. Auto-Owners Insurance (890)

2. State Farm (878)

3. Amica Mutual (865)

4. American Family (862)

5. The Hartford (858)

6. COUNTRY (853)

7. Erie Insurance (851)

8. Travelers (848)

9. Nationwide (841)

10. GEICO (840)

11. California State Automobile Association (839)

12. Safeco (838)

13. Progressive (836)

14. The Hanover (835)

15. Allstate (834)

16. Liberty Mutual (830)

17. Mercury (825)

18. Automobile Clue of Southern California (824)

19. MetLife (824)

20. Automobile Club Group (821)

21. Farmers (804)

22. Esurance (800)

23. Encompass (789)

24. Commerce (772)

25. 21st Century (771)

USAA was listed separately with a five-star satisfaction score of 889, though they were not included in the rankings because they are not open to the general public.