Word on the Street

Homeowners Insurance Customers Are Not Happy

Did your homeowners insurance premium go
up this year? Mine did. Of course I live just
outside of Austin, Texas, where wildfire risk
has risen significantly as the state battles ongoing
severe drought.

Even with a nearly 25% increase in annual homeowners
premium, I was relatively pleased that I didn’t receive a nonrenewal notice as did
many homeowners in my neighboring community. While I wasn’t happy to pay more, I do
understand why — there are more and more claims driven by catastrophe weather events

But after reading many posts on my neighbors’ social media, it was clear that many
people had no idea why their insurance premiums rose substantially or why their carrier
decided to cancel their coverage after 10, 15, 20 years of no claims.
That lack of knowledge by property owners appears to show in this year’s J.D. Power
report on 2024 U.S. Property Claims Satisfaction. With 28 catastrophic weather events
in 2023 causing nearly $93 billion in damage, customer service satisfaction plunged to a
seven year low, the study found. More extreme weather events led to a larger number of
high-severity claims and longer claims settlement times, negatively affecting satisfaction.
The average claims cycle time — the amount of time from reporting the claim to finished
repairs — has now reached 23.9 days, over six days longer than in 2022.
For claims related to catastrophic events, that
average repair cycle time jumped to 34.2 days.
As a result, customer satisfaction has declined
by five points to 869 (on a 1,000-point scale)
from a year ago, the study found.
The average overall satisfaction score among
customers who experienced catastrophic claims
is 841.

“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.”
Because of rising insurance premiums, when customers have a claim and have to cover
$1,500 or more in costs, the study found that satisfaction is negatively affected, even if it is
to cover their deductible.

The increasing frequency of catastrophic weather events coupled with policies that often
have higher deductibles for this type of weather (wind, hail, named storms, etc.), means
more customers will be paying higher deductibles.

Andrea Wells
V.P. of Content, INSURANCE JOURNAL APRIL 1, 2024