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Accenture: Satisfied Customers Not Always Loyal

More than 40% of customers who submit claims are likely to switch insurers within the following year, regardless of satisfaction.

Insurers may be pleased to hear that 86 percent of insurance customers who submitted a claim within the past two years were satisfied with the way it was handled. However, they will be less happy to learn that of those who submitted claims, 41 percent are still likely to switch to another insurer within the following year. 

This data comes from a recent study by Accenture, which surveyed almost 8,000 automobile and home insurance customers across 14 countries. Results indicate that policyholders expect higher levels of service and are willing to exchange personal data in order to receive it.

“While a customer who is dissatisfied with the way his or her claim was handled is almost certain to defect, a satisfied customer will not necessarily remain loyal,” says Michael Costonis, managing director in Accenture’s insurance industry practice and global head of claims services, in a news release. Insurers must provide a differentiated claims experience that delivers exceptional service and maintains appropriate financial discipline.

Costonis explains that merely the act of filing a claim increases the likelihood that a customer will transfer, regardless of how happy they are with the handling process. Survey results indicate that customers who submitted a claim within the two-year timeframe were almost twice as likely to switch insurers within the following year as those who did not submit a claim.

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The speed of settlement and transparency of the process are the most critical contributors to customer loyalty. Each was cited by 94 percent of respondents as a key component of claims processing interactions.

Customers have certainly altered their expectations for service, but they are also willing to help improve it by sharing personal data describing their homes and cars. Respondents were open to providing information on the condition of their cars (56%), driving habits (52%), and GPS locations (39%). Three-quarters of homeowners indicated they would share information collected by smoke, carbon monoxide, humidity, and motion detectors; and more than one-third would share footage from security video cameras. 

More than three-quarters (77%) said they would share information in exchange for lower premiums; and more than half (59%) would do so to speed up the claims process. Almost 30% would share their data to receive personalized recommendations that may help them better manage risk and avoid loss.

“Customers are willing to share information, and insurers that are able to use this information to help customers manage risks and reduce the number of claims will not only lower claims costs but may gain an advantage in terms of customer loyalty,” said Thomas Meyer, managing director of Accenture’s insurance industry practice in Europe, Africa, and Latin America, in the release.  

Insurers should consider how connected devices and other digital technologies could help customers better manage risk and reduce the frequency of their claims, says Costonis. Two-thirds of customers said they would prefer using digital channels to check claims status. Half said they would never recommend an insurer that did not offer digital channels, and 44 percent would leave insurers that lacked digital offerings. 

[At the 2014 Insurance & Technology Executive Summit, join CSAA VP Bob Valliere, Millers Mutual COO Larry Fortin, and Celent analyst Donald Light as they discuss mastering core systems modernization with an eye towards enabling insurance market agility -- Nov. 9-11 in Bal Harbour, Fla. Register today.]

Kelly Sheridan is Associate Editor at Dark Reading. She started her career in business tech journalism at Insurance & Technology and most recently reported for InformationWeek, where she covered Microsoft and business IT. Sheridan earned her BA at Villanova University. View Full Bio

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Nathan Golia
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Nathan Golia,
User Rank: Author
10/19/2014 | 10:33:33 PM
Telematics
Seeing people open to telematics-transmitted data like car condition, driving habits, and location is nice, but what can insurers do with that knowledge to foster a more intimate relationship with their customers? They have to do a very good job of explicating the value of telematics programs.
Byurcan
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Byurcan,
User Rank: Author
10/15/2014 | 9:00:29 AM
Re: What else can they do?
That's a good point. I think in general people have less of an attachment to their insurance company, as opposed to their bank or wealth advisor. So any little thing an insurer can do to stand out would probably help.
KBurger
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KBurger,
User Rank: Author
10/13/2014 | 2:56:31 PM
Re: What else can they do?
Yes, you'd like to think that people value better service/experience but sometimes it just comes down to price. I guess part of what Accenture is suggesting in its analysis is that perhaps people will value -- and pay more for -- more insight, customization, etc. That's kind of the concept behind usage-based insurance (altho there theoretically you are getting a discount for sharing personal info). But I don't think we're there yet.
Kelly22
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Kelly22,
User Rank: Author
10/13/2014 | 2:54:06 PM
Re: What else can they do?
That's a good point too. When it comes down to it, customers always prefer cheaper policies, especially if the alternative insurer offers a similar level of experience. 
KBurger
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KBurger,
User Rank: Author
10/13/2014 | 2:35:45 PM
Re: What else can they do?
This also doesn't factor in the extent to which people were influenced by price and marketing (not to mention the perceived fairness/unfairness of the amount of the claims payment itself). In other words, a policyholder may be completely satisfied with his/her coverage and with the experience of any claims that were submitted; but if another seemingly comparable company offers what seems to be comparable coverage at a significantly better price -- and the original carrier won't match the price -- then why shouldn't a consumer switch? This also has to do with the commiditization of many personal lines products.
Kelly22
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Kelly22,
User Rank: Author
10/13/2014 | 2:21:21 PM
Re: What else can they do?
That's what I was thinking as I was reading the results of the study. It seems like insurers could be using additional customer information to help policyholders better manage their risk and avoid claims - an ideal way to retain customers, since simply having a claim can cause people to switch. I also think that if people notice their insurer going the extra mile to help them manage their risk, they will be more likely to stick with that carrier. 
KBurger
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KBurger,
User Rank: Author
10/13/2014 | 2:04:23 PM
What else can they do?
So it's not necessarily the claims experience itself -- it's all the things a carrier can do to minimize the chance of a claim ever occurring that make the difference. I don't see how all the information sharing would make a significant difference in actually handling the claim. Apart from speed, accuracy & possibly more generous pay-outs, what else can insurers do to improve the claims experience? I guess I'm not surprised that there's a trend showing that customers who have filed claims, regardless of how they felt about that experience, are still more likely to switch -- but it seems like that has more to do with the overall experience of dealing with the insurer rather than the claims experience specifically (although for most consumers, filing a claim may be the only interaction they have with their insurer after purchasing the coverage).
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