A recent study by J.D. Power has shown that a combination of severe catastrophic losses, supply chain-related delays, and inflation has conspired to make 2022 the worst year financially for homeowners insurance providers in the past decade.
According to analysts, the combination of more severe events, as well as rising costs and longer cycle times has “strained” customer satisfaction and “tested” the limits of the digital tools that were designed to help the industry respond more quickly and efficiently.
The survey highlighted that the average claims cycle time – the amount of time from reporting the claim to finished repairs – has now increased to 22 days, which is a week longer than what was reported in the 2021 study.
However, delays are even longer for customers that have multiple payments, with some customers even saying that they received final payment at 31.5 days on average, nearly a week longer than it was in the 2021 study.
J.D. Power stated that the increases have been driven by a combination of severity of damage and continued delays getting the materials needed to complete repairs.
The survey also highlighted how insurance company results are fairly mixed, as eight ranked insurers showed declines in satisfaction while nine improved year-over-year. However, the insurers that had the largest increases in satisfaction were able to limit their customers from needing to contact them for information, which J.D. Power cited as being a key difference between brands that have improved in score and those that have declined.
Mark Garrett, director, insurance intelligence at J.D. Power, commented: “The P&C industry playbook for the past few years has been to invest heavily in digital solutions that streamline the claims process for customers, while reducing costs and improving efficiency for carriers. However, the longer cycle times have made it increasingly difficult to keep customers informed via digital channels and limit their need to contact their insurer with questions.
“J.D. Power has seen a sharp rise in the number of customers contacting their insurer for information, particularly tied to these longer-tailed claims. Satisfaction among customers who need to primarily call their insurer for updates includes some of the lowest scores compared with other update methods. Also noted this year is that the increase in severity has driven down digital claim reporting as lower-severity claims are more likely to be reported digitally.
“In fact, this is the first year J.D. Power has ever seen declining use of digital claims reporting, digital used as a primary channel for status updates and for submitting photos that were used for the estimate. This is a worrying sign for the industry, as digital tools are apparently not meeting customer needs.”