The FINANCIAL -- NEW YORK and LONDON -- Although a large majority (86 percent) of insurance customers who have submitted a claim in the past two years are satisfied with the way it was handled, 41 percent of those who have submitted a claim are still likely or very likely to switch to another insurer in the next 12 months, according to new research by Accenture. The research is based on a survey of nearly 8,000 automobile and home insurance customers in 14 countries.
Fourteen percent of insurance customers who have submitted a claim in the past two years are dissatisfied with the way it was handled, and 83 percent of these dissatisfied customers are planning to switch or have already switched to another insurer, according to the survey.
"While a customer who is dissatisfied with the way his or her claim was handled is almost certain to defect, a satisfied customer will not necessarily remain loyal," said Michael Costonis, a managing director in Accenture's Insurance Industry practice and global head of Claims Services. "The survey results clearly show that delivering average claims satisfaction levels is not enough. The bar has been raised and in order to clear it, insurers need to provide a differentiated claims experience that not only delivers on service but maintains the appropriate financial discipline as well," he added.
The survey also reveals that customers who have submitted an insurance claim in the past two years are almost twice as likely to switch insurers in the next 12 months compared to those who have not submitted a claim: 41 percent compared to 22 percent.
"The very act of filing a claim makes a customer much more likely to switch insurers, regardless of how satisfied they are with the experience," said Costonis. "Insurers should look at how connected devices and other digital technologies can help customers better manage risks to reduce claims frequency."
Customers are willing to share information in return for certain benefits
The survey also indicates that more than three-quarters (77 percent) of insurance customers would be willing to share personal information with their insurers in return for certain benefits. While 77 percent of these respondents would share information if that would enable them to receive lower insurance premiums, more than half (59 percent) would do it for quicker claims settlement, and 28 percent for personalized recommendations that could help them better manage risk and avoid losses.
When asked what types of information they would be willing to share, more than half (56 percent) of the automobile insurance customers surveyed said they would share information about the condition of their cars, 52 percent about their driving habits and 39 percent about their location via Global Positioning System (GPS). As to home insurance, 78 percent of customers surveyed said they would share information collected by smoke, carbon monoxide, humidity or motion detectors, and more than one-third (35 percent) said they would share security video camera footage, according to Accenutre.
"Customers are willing to share information, and insurers that are able to use this information to help customers manage risks and reduce the number of claims will not only lower claims costs but may gain an advantage in terms of customer loyalty," said Thomas Meyer, managing director of Accenture's Insurance industry practice in Europe, Africa and Latin America. "To do this, however, insurers will also have to meet customer expectations in a wide range of areas, including speed of settlement, transparency and use of innovative technologies such as mobile and social media," he added.
Speed of settlement, process transparency are key contributors to customer loyalty
The survey findings also suggest that speed of settlement and process transparency are the most important contributors to customer loyalty, with each cited by 94 percent of survey participants as a key expectation when interacting with insurers during the claims process. Additionally, 90 percent of respondents cited the ability to contact the provider at any time in order to check real-time status of a claim as an important expectation.
Almost two-thirds (61 percent) of insurance customers said they would prefer to use digital channels to check the status of their claims. Half (53 percent) said they would not recommend their insurers to friends and family if they did not have the ability to use digital channels to interact with these insurers, and more than two-fifths (44 percent) said they would switch to another insurer if they could not use these channels.
Social media is another area with growing influence on customer perceptions. Approximately one in three (29 percent) of respondents say they post or plan to post on social media channels about their positive claims experience, and a similar number (30 percent) say they post or plan to post about their negative claims experience. In addition, 43 percent of respondents said they either read or plan to read reviews that other people post about their claims experience, according to Accenture.
Among other survey findings:
More than one in six (17 percent) of customers surveyed admitted to overstating the value of their loss when they last submitted an insurance claim, but this admission of overstatement drops to 8 percent among those who are "very satisfied" with the management of their claim.
Only 11 percent of survey respondents who have heard about mobile applications are currently using a mobile application for insurance, although 53 percent of those who have heard about such applications plan to use one in the future. More than one-third (37 percent) who have heard about such applications said they are not interested in using them.
Customer satisfaction with claims experience varies from country to country; it is highest in Denmark (92 percent), the Netherlands (91 percent) and the United States (90 percent) and lowest in Italy (73 percent) and Spain (76 percent).
"The survey findings underscore the 'make-or-break' nature of the claims experience for insurers. Customers dissatisfied with how a claim is handled are not only likely to switch insurers; they are also likely to share their unhappy experience via social media. Insurers need to rethink their claims operating models, organizational structures and even their corporate cultures to get in sync with today's demanding and digitally connected customers," said Costonis.