A combination of premium increases and less-frequent communication with customers has led to a slight decline in customer satisfaction with home insurance providers, according to the J.D. Power and Associates 2010 Canadian Home Insurance Customer Satisfaction Study.
The study, now in its third year, measures home insurance policyholder experiences with their primary insurers. Customer satisfaction with home insurance providers is examined in five factors: interaction; price/premium; policy offerings; billing/payment; and claims.
Overall satisfaction with home insurance providers averages 735 on a 1,000-point scale in 2010, down two points from 2009. The decrease is primarily driven by a decline in satisfaction with the policy offerings factor, down 17 points from 2009. In addition, six home insurance brands have experienced substantial declines in overall satisfaction from 2009, while five brands improved notably.
An increasing proportion of home insurance policyholders have experienced rate increases — 47 per cent in 2010, compared with 43 per cent in 2009. These increases are likely due to increasing property values. Between 2008 and 2010, average customer-reported market values have increased by 12 per cent — from $285,000 per primary residence to $320,000, respectively. During the same period, average home insurance premiums among single-property owners increased by 11 per cent (from $838 to $934, respectively, on average). Despite the higher incidence of rate increases, satisfaction with price and premiums has improved in 2010.
“Property values have increased during the past few years in most areas in Canada — so homeowners are rather accepting of premium increases, as they realize they are necessary to cover assets that have appreciated in value,” said Lubo Li, senior director and practice leader of Canadian financial services and insurance at J.D. Power and Associates. “However, dissatisfaction with policy offerings indicates that insurance providers may not be doing enough to educate policyholders about options that can help bring down costs. A lack of proactive discussion on the part of insurance providers may be contributing to customer perceptions that their policies are not fully meeting their needs.”
In 2010, 57 per cent of policyholders indicate they were notified in advance of premium amount changes, compared with 63 per cent in 2009. In addition, only 28 per cent of policyholders indicate their insurance provider discussed coverage and discount options with them, compared with 43 per cent in 2009.
The decrease in satisfaction with home insurance providers contrasts sharply with the improvement in satisfaction among customers of auto insurance providers in 2010. According to the J.D. Power and Associates 2010 Canadian Auto Insurance Customer Satisfaction Study, overall satisfaction among auto insurance policyholders has improved by 26 points in 2010, compared with 2009. While overall satisfaction with home insurance providers is still higher than satisfaction with auto insurance providers (735 vs. 727, respectively), the marked improvement among auto insurance providers suggests that insurance companies may need to renew their focus on satisfying home insurance policyholders, particularly since many policyholders bundle their auto and home insurance policies.
“Insurance companies typically place more emphasis on communicating auto policy rate and coverage changes, compared with home insurance policies, as auto premiums tend to be higher and are regulated more heavily,” said Li. “It’s important for insurance companies to be consistent in their approaches to both product lines, adequately notify home and auto insurance customers of any impending changes in price or coverage, and keep coverage option discussions ongoing.”
La Capitale General Insurance ranks highest among home insurance providers with a score of 798, improving by 33 points from 2009, and performing particularly well in three of the five factors: billing and payment; interaction; and price/premium. Following La Capitale General Insurance in the rankings are Belairdirect (791) and Desjardins General Insurance (779). Belairdirect improves by 34 points from 2009 and performs particularly well in the policy offerings factor.
The study findings also include the following key trends:
- Home insurance policyholders who indicate they are “delighted” (providing ratings of 10 on a 10-point scale) with their provider gave an average of four positive recommendations in the past 12 months. In contrast, policyholders who are “dissatisfied” (providing ratings of four or below) gave an average of three negative recommendations in the same timeframe.
- The proportion of home insurance policyholders who indicate having filed a claim within the past 12 months has declined to 6 per cent in 2010, compared with 11 per cent in 2009.
- The most commonly used channel of contacting the home insurance company is through a local agent or broker, which is used by 43 per cent of policyholders. However, the most-preferred method of contact is via phone, which is cited by 73 per cent of policyholders.
The 2010 Canadian Home Insurance Customer Satisfaction Study is based on responses from more than 5,000 home insurance policyholders. The study was fielded in July 2010.