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Cycle Time: The Most Important Metric in Claims

J.D. Power & Associates' latest homeowners claims satisfaction numbers indicate that the carriers with the lowest cycle times fare the best.

It's the 21st century, and consumers crave one thing: Speed. Insurers find evidence of it in their acquisition efforts, but it's perhaps even more important at the "moment of truth" for carrier-policyholder relationships: the moment of claim.

J.D. Power & Associates' 2014 Property Claims Satisfaction Study, which polled 5,500 homeowners that filed a claim in 2013, found that cycle time within a claim was the biggest indicator of satisfaction. The No. 1 ranked insurer, Amica, is far ahead of industry averages, according to Jeremy Bowler, senior director of the insurance practice at J.D. Power.

"Pne of the things we see on our claims survey, both property and automotive. is that it comes down to expediency," Bowler says. "An Amica claim gets paid in 11 days, which is a measurably faster process than the industry average."

It starts at the beginning: Amica adjusters return first notice of loss calls in about two days, compared to the industry average of about three days, Bowler explains.

"Then when it comes to getting out there to take a look at what happened, the industry averages 7.7 days and Amica averages 5.5 days," he continues. "They're calling you back quicker, they're getting the estimate drawn up faster."

[Read how advanced mapping technologies help Amica respond faster to claims]

J.D. Power identified cycle time as the leading factor in satisfaction through its interviews with customers, Bowler explained.

"We're asking each person who reported who had a claim to describe it, then rate it, and the people who rate the claims experience favorable, we look at how they described their claim," he says. "Three weeks is the breaking point -- you take longer than that and satisfaction tumbles tremendously, and the industry basically just barely scrapes in on average."

Amica's overall score of 898 on J.D. Power's 1,000-point scale topped Erie Insurance with 877 and Nationwide with 858. After a dip in satisfaction related to Sandy claims, the industry rebounded overall -- but the average score was 843, still well below the top insurers. However, compared to the industry performance in the Hurricane Katrina season of 2005, carriers are much more adept at responding to major events with empathy and understanding for their customers' situations now.

"In 2005 carriers thought they were slick if they gave you a debit card, but there was no power so the plastic was useless," Bowler says. "But with Sandy you had a company that literally brought power to a hotel in the northeast, brought the whole hotel up so they had a base of ops for their staff, and were trucking in water and food services so their teams could function in the area, and that was spreading out to the community. The industry learned that that's all part and parcel with being a good corporate citizen."

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Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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