According to a recent study by J.D. Power and Associates, the disparity in satisfaction levels between homeowners and auto insurance policyholders continues to widen. The findings of the 2008 Homeowners Insurance Study indicate that consumers' contentment with auto policies is on the rise, whereas homeowners' satisfaction ratings remain stagnant, and claims are playing a major role.
Now in its eighth year, the J.D. Power and Associates study examines customer satisfaction with homeowners' insurance policies by analyzing five key factors: policy offerings; price; billing and payment; interaction; and claims. Factored in this year's results were responses collected between May and June 2008 from more than 12,900 homeowners' insurance policyholders.
Amica Mutual ranked highest for the seventh consecutive year among homeowners' insurance providers. Following Amica were the Auto Club of Southern California, Cincinnati Insurance, Erie Insurance, and Shelter, respectively.
The gap in customer satisfaction levels between homeowners' and auto insurance providers has steadily widened since 2004, with homeowners' insurance customer satisfaction remaining essentially flat during the past five years. As cited by the study, satisfaction with homeowners' insurance shifted only one index point — from an average score of 753 on a 1,000-point scale in 2004 to 752 in 2008. Although some improvements have been noted in the policy offering factor, the lack of overall improvement can be attributed to lagging scores for claims and pricing factors.
The declining claim-related ratings can be attributed to a wave of weather-related catastrophes, such as the 2004 Florida storms, Hurricanes Katrina and Rita in 2006, and the California wildfires over the past few years. As a result of these losses, many homeowners' insurance providers have instituted a series of programs to limit exposure and raise prices. These efforts have negatively impacted the customer experience.
“As a result of these heavy losses, coverage in the affected areas is more difficult to obtain and policies are more expensive nationwide,” said Jeff Leiman, senior director of the insurance practice at J.D. Power.
In contrast, satisfaction with auto insurers has steadily increased during the same period, with ratings rising 25 points from 2004 to 2008. In particular, auto insurance policyholders report being more satisfied with pricing. This holds especially true for those who bundle multiple policies with their homeowners' insurance provider.
“Bundling multiple policies delivers benefits to both policyholders and providers,” said Leiman. “The practice allows providers to capture additional business and policyholders to qualify for additional discounts. More than 90 percent of bundlers renew those policies with their providers, while only 82 percent of non-bundlers do the same.”
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