Record catastrophic weather hits insurance claims, customer satisfaction

In 2023, the United States witnessed a record-breaking 28 catastrophic weather events, each inflicting over $1 billion in damages, culminating in a staggering total of $92.9 billion. The J.D. Power 2024 U.S. Property Claims Satisfaction Study, released today, highlights the adverse impact of these severe storms on the insurance claims process – and on customer satisfaction.

The surge in high-severity claims has resulted in extended durations for crucial steps such as damage assessment, customer compensation, and repair completion. This has led to a significant decline in customer satisfaction, reaching its lowest point in seven years.

“Catastrophic weather events are straining an already fragile system still experiencing supply chain issues that affect the availability and cost of materials,” said Mark Garrett, director of claims intelligence at J.D. Power. “Resources become strained for both insurers and the contractors doing the work. Unfortunately, it’s when claims last beyond three weeks that J.D. Power sees things decline. When claims last less than three weeks, satisfaction improves, so it’s the longer claims that are solely responsible for the decline. Insurers are challenged to manage expectations and proactively communicate during longer claim periods as customers tend to have more questions when experiencing delays.”

Key findings

Key findings from the 2024 study include:

1. Extended Repair Times: The average claims cycle time has increased to 23.9 days, over six days longer than in 2022. For catastrophic event-related claims, the average repair time jumps to 34.2 days. As a result, customer satisfaction has decreased by five points to 869 (on a 1,000-point scale) from the previous year, with those experiencing catastrophic claims scoring an average satisfaction of 841.

Digital Tool Usage: While customers using digital tools for claim reporting and photo submission experience faster claim cycle times, their overall satisfaction doesn't always improve. Satisfaction drops more significantly among digital users than non-digital users when claims take longer than expected. Overall satisfaction among customers reporting their claim digitally is 903 when the claim is settled in less than three weeks. That score falls to just 727 after 31 days. “Insurers are offering digital tools and managed repair partners to help streamline the process, but these efforts are met with mixed results,” Garrett said. “Customers still expect things to move along quicker so expectation management is key.”

Impact of Rising Costs: With many customers facing increased insurance premiums, those needing to cover costs of $1,500 or more, such as deductibles, experience a decline in satisfaction. The frequency of catastrophic weather events has led to more customers paying higher deductibles, with satisfaction dropping 27 points among this group. J.D. Power has seen an increase to 28% from 23% in 2022 among those spending $1,500 or more for either their deductible or out-of-pocket expenses. Satisfaction has declined 27 points among this group during that period.

Digital Tools and Customer Expectations: Customers using digital tools report faster repair cycle times, averaging 15 days compared to nearly 28 days for non-digital users. However, the expectation for even shorter repair times remains unmet, with those stating the process took as long as expected having an average repair time of only 11 days.

Consistency in Service: The consistency of service provided by multiple insurance representatives is crucial for customer satisfaction. A lack of consistency leads to a significant drop in satisfaction levels. Sharing information so the customer does not need to repeat themselves, as well as representatives having similar knowledge and soft skills is critical in providin consistent levels of service. For the 27% of customers who say that level was not achieved, satisfaction dropped 200 points.

Amica ranked highest in property insurance claims experience with a score of 906, followed by AIG (889) and Erie Insurance (888).

The study, which measures satisfaction among insurance customers who filed a property damage claim, is based on responses from 6,019 homeowners who filed a claim within the past nine months. The study was conducted from January 2023 to December 2023, examining factors such as settlement, claim servicing, first notice of loss (FNOL), estimation process, and repair process.