Complex Sandy-related claims lead to decline in customer satisfaction

Overall satisfaction with the property claims experience is stable, although satisfaction with the handling of claims from Superstorm Sandy declined substantially, according to the latest study from J.D. Power.

The study is based on responses from about 2,500 homeowners insurance customers who made claims after April 1, 2012, measuring satisfaction based on settlement; first notice of loss; estimation process; service interaction; and repair process.

Overall, claimants’ experience with Superstorm Sandy property claims handling declined about 20 points to 82 (on a 1000-point scale), compared with 846 in the previous period, which covered claims that were filed between July 2011 and December 2012.

However, overall satisfaction with all property claims during the period of the most recent study remained stable at 832 points.

“Since we wait until the conclusion of each claim to survey the customer, the complexity of the Superstorm Sandy claims in this wave has increased from the last reporting period,” noted Jeremy Bowler, senior director of the insurance practice at J.D. Power.

“Property claims related to Superstorm Sandy were primarily for items damaged in the yard, and the settlement process was expedient. The current wave study findings include more complex Superstorm Sandy property claims being processed for the structure of the home.”

The average settlement amount for property claims also increased to $10,205 from $5,517 in the previous period. An increase in the number of claims related to damage to the exterior of the house (71% vs. 65%) also contributed to the higher settlement figures, the company said.

More complex structural damage claims tend to take longer to settle, leading to less satisfaction, the firm also noted. “These more complex Superstorm Sandy claims captured in this wave took much longer to settle than the Sandy claims captured in the previous period, and all of the timing metrics related to claims handling have increased,” it added.

“Providing an accurate estimate of how long it will take to settle a claim is very important in managing the claims experience,” Bowler also noted. “When estimates to settle are extended and claims become drawn out, the possibility that insurers will not return claimants’ calls increases, as does the likelihood claimants will be required to repeat information, both of which contribute to a decline in claims experience satisfaction.”