Insurer Profitability And Broker Expertise Emerge As Key Drivers Of Customer Satisfaction In J.D. Power 2016 Large Commercial Insurance Study
Lockton Ranks Highest among Large Commercial Insurance Brokers; XL Catlin Ranks Highest among Insurers
Costa Mesa, Calif.: 5 Dec. 2016 — According to the J.D. Power 2016 Large Commercial Insurance Study,SM the key variables driving overall commercial insurance customer satisfaction are insurer profitability and broker expertise. The highest-performing broker in this year’s study is Lockton. The highest-performing insurer in this year’s study is XL Catlin.
Yarra Square Partners returned 19.5% net in 2020, outperforming its benchmark, the S&P 500, which returned 18.4% throughout the year. According to a copy of the firm's fourth-quarter and full-year letter to investors, which ValueWalk has been able to review, 2020 was a year of two halves for the investment manager. Q1 2021 hedge fund Read More
The study, now in its third year, measures customer satisfaction with commercial insurers and insurance brokers. Commercial insurer satisfaction is based on five factors: service interaction; program offerings; price; billing process; and claims. Satisfaction with commercial insurance brokers is based on nine attributes: quality of advice and guidance provided; reasonableness of fees; ease of the renewal process; effectiveness of risk control services; variety of program offerings; effectiveness of program review; price, given services received; billing and payment process; and claims process. The study was conducted in conjunction with RIMS (the risk management society™), a global not-for-profit organization with a membership of more than 11,000 risk management professionals located in more than 60 countries.
Among large commercial insurers, a distinct correlation is found between customer satisfaction and insurer profitability, as measured by total commercial combined financial ratios. The highest-performing companies in overall satisfaction—XL Catlin (773 on a 1,000-point scale); CNA (767); and Chubb (765)—are also found to have among the industry’s strongest combined ratios, suggesting that the most profitable insurers are able to support more flexible underwriting standards to meet customer needs more effectively. Overall, J.D. Power finds a 0.67 correlation between customer satisfaction and insurer profitability.
Among commercial insurance brokers, the highest-performing firms, Lockton (863) and Arthur J. Gallagher & Co. (823), outperform larger rivals by a large margin. The most significant single attribute driving that performance is quality of advice/guidance provided, demonstrating for the second consecutive year that brokers who have an in-depth expertise and establish a hands-on, consultative relationship with their clients are consistently driving the highest levels of customer satisfaction. The study also shows the inverse to be true. Among the 20% of customers who indicate their broker does not completely understand their business needs, satisfaction declines by an average of 136 points.
“As rates across the U.S. commercial property and casualty insurance market continue to decline, delivering an exceptional customer experience has become the x factor that levels the playing field and opens up new growth opportunities for commercial insurers and brokers,” said Greg Hoeg, vice president of the U.S. insurance practice at J.D. Power. “With the potential for rate volatility in 2017 and beyond now increasing, keeping a laser focus on customer satisfaction will be a critical driver of success.”
“The key for risk professionals to effectively manage uncertainties is knowledge,” said Mary Roth, RIMS CEO. “Gaining the perspectives of their peers through this J.D Power and RIMS study arms practitioners with the insight to make informed strategic decisions regarding the future of their organizations’ insurance programs. We are proud to partner with J.D. Power and offer the risk management community with this valuable resource.”
Key Finding among Brokers
Domain Expertise, Sage Counsel Drive Satisfaction: The single most critical touch point between a customer and an insurance broker is the quality of advice/guidance provided. Industry-wide, brokers receive an average rating of 8.34 on a 10-point scale for this metric. Customers of highest-performing broker Lockton provide the firm a rating of 8.89, a key factor driving its overall 40-point lead over the second-ranked broker in the study.
Key Findings among Insurers
Satisfaction Linked to Profitability: J.D. Power finds a 0.67 correlation between insurer profitability and overall customer satisfaction, suggesting that the more profitable the book of business an insurer has, the greater the likelihood that the insurer will also have high levels of satisfaction.
Flexible Program Design Impacts Satisfaction: Providing flexible program design and implementation is the most impactful single key performance indicator (KPI) for commercial insurers. However, the study finds that is not a standard practice—the rate at which insurers deliver on this KPI is only 47%.
Large Commercial Insurance Broker Rankings
- Lockton ranks highest with a score of 863
- Arthur J. Gallagher & Co. ranks second (823)
Large Commercial Insurer Rankings
- XL Catlin ranks highest with a score of 773
- CNA ranks second (767)
- Chubb ranks third (765)
The 2016 Large Commercial Insurance Study provides an independent and objective measure of overall satisfaction among large commercial insurance risk professionals in the United States and Canada. The study is based on responses from more than 1,400 risk professionals or employees who provide oversight for their organization or are members of their organization’s risk management team. Organizations included in the study have at least $100 million in annual revenue or operating budget and have purchased a commercial insurance policy from one of the profiled insurers or brokers.
Media Relations Contacts
J.D. Power—Geno Effler; (714) 621-6224; [email protected]
RIMS—Josh Salter; (212) 655-6059; [email protected]
About J.D. Power http://www.jdpower.com/about/index.htm
About RIMS www.rims.org
# # #
Note: four charts follow.
Customer Satisfaction – Insurer Profitability & Broker Expertise
 Source: J.D. Power Insurance Performance Portal (IPP). Based on direct premiums written.