How good is the service that insurers deliver? Are brokers getting the same level of service from insurers for commercial lines as for personal lines? Could the big players do better? These were the questions at the heart of the Insurance Times 2010 Broker Service Survey. We examine some of the key findings
Q. What matters to brokers?
A. The 2010 commercial lines survey confirmed that brokers are quite clear about what they want from insurers. More than 90% of nearly 700 respondents indicated that “ease of access to decision makers”, “underwriting expertise and flexibility”, “quality of cover”, and “claims fairness and speed of settlement” were of vital or great importance. Service demands within documentation categories were only slightly lower.
Brokers were equally clear but less demanding about personal lines. “Ease of access to decision makers”, “underwriting flexibility” and “documentation clarity” were all deemed to be of vital or great importance by more than 75% of the broker respondents.
Service categories relating to claims were seen as the most important of the personal lines service categories but it could be argued that this is an area where brokers need insurers to give good service to their clients rather than themselves, as they are less likely to be involved in claims.
Q. Do insurers deliver?
A. The answer seems to be that it depends on whether or not good service is required or if merely satisfactory service will do.
In the survey, brokers were asked to rate insurers’ service within the different service categories in terms of excellent, good, satisfactory, poor or very poor. Commercial and personal lines were treated separately.
Nearly 60% of the 35 commercial lines insurers investigated received at least 50% excellent or good ratings in total across all service categories. And if the satisfactory ratings are included, this figure rose to 80% for all but two insurers.
A similar picture emerged for personal lines service. All of the insurers received at least a satisfactory service rating in 80% of cases and for just over half of the 28 insurers in the survey, 50% of their ratings were either excellent or good.
In other words, brokers indicated that most insurers surveyed were delivering at least a satisfactory level of service.
Q. Which companies consistently deliver good service?
A. One company, Chubb, stands head and shoulders above the rest. In 2010, 73% of Chubb’s ratings were excellent or good for commercial lines while this figure was 87% for personal lines. No other commercial lines insurer received above 70% excellent or good ratings but seven companies – Hiscox, ACE, Arista, Fusion, Ecclesiastical, HCC International and CNA – received above 60%.
For personal lines, where brokers are slightly less demanding in their service expectations, 10 insurers achieved over 60% excellent or good ratings. Of these, six including Chubb achieved over 70%, and only Hiscox joined Chubb in the premier league achieving over 80%. Hiscox received 83% good or excellent ratings.
Q. What about service from the big insurers who dominate the market?
A. The positive news is that all of the large insurers serving the commercial lines market – Aviva, Allianz, AXA, NIG, RSA and Zurich – achieved 80% and above of ratings that were at least satisfactory. A similar picture emerged for personal lines.
Q. But are they delivering good service?
A. In this the rating figures were better for commercial lines than for personal lines. Two of the major players stood out in commercial lines; Allianz achieved 55% good or excellent ratings while Aviva’s result was 50%. On the other hand, AXA and NIG could only muster 38% of the top ratings indicating that a lot of work needs to be done by these two to match their peers.
But the large insurers appear to be putting less effort into service in the personal lines market. Here, no major insurer achieved above 50% good or excellent ratings, attaining percentages that lay in the forties. They need to watch out, as two other sizeable players – Ageas (Fortis) and LV= – are waiting in the wings to increase their share of brokers’ business.
For both of these insurers, 50% of service ratings were either good or excellent.
Q. What will the future bring?
A. Of course, achieving good and excellent scores is a notable achievement, but it does not automatically follow that investing in the best broker management services is the “best” strategy for an insurer. The costs of achieving excellence may not be justified by the economic returns and only insurers themselves can really be the judge of this.
So, over the next year or two, it will be interesting to see how insurers with low percentages of good and excellent scores react now that they know how they stand against their competitors. Will they judge that their service quality is good enough for them to keep their broker business base and deliver their business aims? Or will they see a need to change?