Canadians were already unhappy with their home insurance even
before the policy confusion surrounding the flooding catastrophes in June and July, according to the J.D. Power 2013 Canadian Home Insurance survey released on Aug. 1.
“Overall customer satisfaction with Canadian home insurance companies declined substantially as premiums increased and claims service levels deteriorated across all regions,” according to the consumer study. “In the wake of recent severe weather events, insurers have been raising rates to adequately cover anticipated claims, and this has negatively impacted satisfaction.”
The J.D. Power study is based on responses from 7,808 Canadian home insurance customers collected from April 2013 through May 2013, wrapping up about a month before severe storms and major flooding wreaked havoc in Calgary and Toronto.
Alberta’s finance minister recently estimated the overall flood damage in his province will reach approximately $3 billion, although insurance brokers have told Insurance Business that they believe the insured damage alone will be in the neighbourhood of $2 billion.
In Toronto, flood damage caused by a rain storm on July 8 seems likely to break a record for insured damage caused by storms in August 2005 ($711 million, adjusted for inflation).
J.D. Power’s annual study examined customer satisfaction with their home insurer using five factors: interaction; billing and payment; claims; policy offerings; and price.
Overall customer satisfaction declined nationally in 2012 on a 1,000-point scale from 769 to 761.
Notably, in Western Canada, the satisfaction declined by 13 points to 741, compared with a slight decline in both the Atlantic/Ontario (754) and Quebec (807) regions year-over-year.
“The decrease in customer satisfaction in the Western Region is primarily driven by year-over-year [ranking] declines in price, down 32 points to 669, and claims, down 30 points to 738,” the company said in a statement. “In general, the larger the premium increase amount, the larger the decline in customer satisfaction. Any premium increase of more than $40 is perceived as significant by customers.”
The survey highlighted an important role for brokers in managing consumer expectations, thereby improving customer satisfaction with their home insurance.
Whenever home insurance companies failed to notify customers of a premium change using the customer’s preferred communication method, satisfaction declined by 74 points. However, when customers in the Western Region were contacted by their insurers or brokers to discuss a premium increase, including any policy options they may have to mitigate costs, satisfaction improved by more than 50 points.
Only 68% of customers were contacted post-claim by their insurer or agent, the survey found.
“An agent or broker's involvement in the claims process may substantially improve customer satisfaction,” the survey said.
