Customers value expediency when it comes to settling their insurance claims and getting their vehicles repaired after an accident. In its 2007 Insurance Claims Study, released in December, J.D. Power and Associates found that the time it takes to repair damage can significantly affect insurance customer satisfaction.
The report also examined the claims experience of Progressive Insurance customers who used that company's Concierge program. J.D. Power found that customers generally liked the service, but encountered more problems with repair quality -- findings that could have significant ramifications for both insurers and collision repair shops.
The study is based on 10,832 responses from auto and homeowners insurance customers who filed claims within the past 12 months.
According to J.D. Power, the two-thirds of customers whose vehicles were fixed and returned within 14 days have a satisfaction average of 843 on a 1,000-point scale. However, satisfaction with the claims process declined by 71 points among the 36% of customers who had to wait longer than two weeks for their vehicle to be repaired.
One in four claimants in the study also had out-of-pocket expenses (in addition to their deductible) that were not fully reimbursed. No surprisingly, these customers were the least satisfied with the settlement experience.
"It becomes extremely important to manage customer expectations as far as how long it will take for their vehicle or property to be repaired or replaced," said Jeremy Bowler, senior director of the insurance practice at J.D. Power. "Proactively contacting the customer, keeping them informed and explaining the process at each step can soften the impact of a particularly long claim process."
Satisfaction levels were also affected by the number of people a customer interacted with during the claims process. Nearly 75% of customers with an agent contacted their local agency first, but more than one-third of them were either redirected to call the insurer or transferred to a call center. Those customers tended to be less satisfied with the claims experience.
"One of the big differences between the way customers view the process and the way the insurance company views it, is when the clock starts ticking on the claim," Bowler said. "The customer generally thinks it starts when they report the claim; for the insurance company, it starts when the adjuster starts working, which could be 24 hours later or more."
Bowler says some of the better performing insurers have instituted practices that put the customer in touch with an adjuster as quickly as possible, sometimes allowing claims to be settled over the phone.
Progressive Concierge gets mixed reviews
The study also examined Progressive Insurance's Concierge program. The insurer operates more than 50 Concierge locations in 39 markets where customers can simply drop off their vehicle after an accident, allowing Progressive to manage the repair and rental process for them.
The collision repair industry has repeatedly clashed with Progressive over this program, claiming that it prevents vehicle owners from choosing a repair shop and controlling the repair process.
Customers, however, seem to like the service. Of the 568 Progressive collision customers in the survey, 41% reported visiting a Concierge facility, and those customers generally had a higher level of satisfaction with their service than non-Concierge Progressive customers.
This was primarily due to shorter cycle times. Repairs done through a Concierge facility were completed in an average of only 11.4 days, the lowest average of all insurers in the study, and much lower than the industry average of 16.2 days (as well as Progressive's non-Concierge average of 14.6 days). Allstate customers had the longest wait, with an average of 19.2 days to complete repairs. Seventy-eight percent of Concierge customers reported that their vehicle was repaired on schedule, compared to the industry average of 72%.
"This is an example of a business model that's expensive, but it allows Progressive to crank through the first few steps of a claim within hours rather than days," Bowler said.
However, this increased cycle time seems to come at a cost in repair quality. Eighty-seven percent of all respondents said that their vehicle was repaired correctly without the need to return to the body shop for additional work. While non-Concierge Progressive customers beat the industry average, with 90% reporting correct repairs, Concierge customers ranked near the bottom of the list at 84%. Overall repair quality was also ranked lower by Concierge customers.
According to Dan Risley, executive director of the Society of Collision Repair Specialists (SCRS), these findings validate industry concerns about these programs.
"The results of this study only raise additional questions to the limited answers it provides," Risley said. "The better question is, why did the repair quality drop? Was it the quality of the repairers they’ve selected to participate? Was the quality of the collision repair facility that was willing to accept the terms and concessions to be a participant in the program? Was it the Progressive staff appraiser that wrote an incomplete or poor estimate? Was the quality compromised because the repair facility felt as if Progressive was more concerned with cycle time than quality? These are the types of questions that would substantiate why this program is not meeting the needs of the vehicle owner."
Some of the quality issues may be due to Progressive's practice of having adjusters examine the vehicle before returning it to the customer. "The adjusters are better trained to know if the repair has been completed, and more likely to send the car back for additional work, so those customers would respond that their car wasn't fixed correctly the first time," Bowler said.
Risley points out that, though, that Progressive was ranked last in almost every category of the group's recent survey of repairers.
"Unfortunately, SCRS receives complaints about Progressive more so than any other insurance carrier," Risley said. "The complaints range from Progressive refusing to reimburse the repair facility for necessary repair or replace procedures to them significantly reducing the amount of the estimate to reduce their claims cost at the expense of the collision repairer. All of which could foster a poor quality repair."
Concierge customers are also more likely to hold Progressive responsible for the repairs instead of the body shop. While only 18% of all respondents felt that their insurer was responsible for the quality of their repairs, a whopping 63% of Concierge customers held Progressive responsible for the entire repair experience.
"Customers basically recognize that the shop is responsible for the repair," Bowler said. "This is changing for Progressive, and I found it to be a palpable demonstration of how the customer is completely detached from the shop selection or shop management process. That was a big surprise."
Although repairers have criticized the Concierge program, there seems to be a class of customer that prefers to let their insurance company manage the process. Exactly why they've made that choice is still not clear.
"We have not attempted to discern whether certain kinds of customers want to work with the repair center, or if different kinds of customers want to flip the keys to Progressive and walk away," Bowler said. "But overall, those who made the choice to concierge were more pleased than other Progressive customers. The real question for Progressive is whether they are getting the utilization it will take to make the business plan float."
Interestingly, the survey found that the majority of respondents (62%) had a shop in mind when they began the repair process. Only around 3% of the total used a concierge or similar service, while the remainder received a recommendation from an insurer or chose from a list of DRP shops. Bowler said most newer vehicle owners select dealership or OEM-certified repairers, while owners of older vehicles were more likely to defer to the insurance company.
The data on the Concierge program appears to hold some mixed news for repairs shops. While speed is important, it doesn't trump quality. And customer service matters.
According to Bowler, repair shops, through their interaction with the customer and their impact on cycle times, play an important role that can directly affect how the customer feels not only about the shop, but also about the insurer. Receiving a thorough explanation of the repair process, regular progress updates, and a clear explanation of the settlement terms are all important drivers of customer satisfaction.
That's one reason Progressive Concierge customers gave their high-touch claims representatives such good ratings. However, despite performance on cycle times, Concierge customers had satisfaction scores that were only slightly above the industry average because of the repair quality issues.
"Customers are typically naïve in terms of what it takes to assess the damage and repair the vehicle," Bowler said. "If the shop takes the time to explain that the repair is going to take more than a couple of days, that explanation when the customer first arrives at the shop is worth its weight in gold, because it sets a realistic expectation."
The shop, in some respects, has a bit more leverage in the insurer-repairer relationship because of their closeness to the customer.
"Repairers often feel at the mercy of the insurance industry, but when the customer comes to the shop, the shoe is on the other foot to some extent," he added. "When I've spoken to repairers, I've encouraged to think about the services the offer and the way in which they manage customer expectations. That can differentiate them from the competitor down the street, and provides the shop an opportunity to go the insurer and say, 'We can make this a win-win-win situation for everyone involved, and we'd like to have more of your business.'"
To obtain a copy of the report on Progressive's Concierge program, "The Impact of Customer Choice on Insurance Claims Experience," visit www.jdpower.com/corporate/library/download/?files=9998886.
