In 2023, the United States witnessed a record-breaking number of catastrophic weather incidents, with 28 events each inflicting over $1 billion in damages, culminating in a staggering $92.9 billion in total losses.
This unprecedented surge in severe weather occurrences has significantly impacted the insurance industry, leading to an uptick in complex claims and extended timelines for damage assessments, payments, and repairs. This has resulted in the lowest customer satisfaction levels in seven years, according to the J.D. Power 2024 U.S. Property Claims Satisfaction Study.
The study highlights critical challenges faced by insurers and policyholders alike. "The biggest declines in satisfaction are related to explaining the claims process to customers and showing concern for their situation. To navigate this difficult stage, insurers need to redouble their efforts to proactively manage customer expectations and streamline the claims process,” the report advises.
Mark Garrett, director of claims intelligence at J.D. Power, points out the additional strain of ongoing supply chain issues on the system. These issues affect the availability and cost of materials, complicating recovery efforts. "Catastrophic weather events are straining an already fragile system still experiencing supply chain issues that affect the availability and cost of materials," Garrett explains. He notes a distinct drop in satisfaction for claims extending beyond three weeks, underscoring the need for insurers to improve communication and manage expectations for longer claims.
Key findings from the 2024 study include a notable increase in the average claims cycle time, now at 23.9 days, up over six days from the previous year, with catastrophic events pushing that number to 34.2 days. This has obviously affected customer satisfaction, which has seen a decrease, particularly among those dealing with catastrophic claims.
The study also sheds light on the mixed effectiveness of digital tools in expediting claims processes. While digital tools have enabled faster claim cycle times, they haven't consistently led to higher satisfaction levels, especially when claims take longer than expected. This is exacerbated by rising insurance premiums and higher deductibles, particularly for catastrophic weather events, adding financial stress to policyholders.
Garrett emphasizes the importance of expectation management, especially for customers utilizing digital reporting tools. "Insurers are offering digital tools and managed repair partners to help streamline the process, but these efforts are met with mixed results,” he says. Consistency in service, particularly when policyholders interact with multiple representatives, is also critical to maintaining satisfaction levels, highlighting the need for improved communication and customer care strategies amidst the challenges posed by increased catastrophic weather events.
Photo: LG Electronics, licensed under the creative commons 2:0
