Insurance industry earns high marks for customer service
When it comes to customer service, the insurance industry has languished under the cloud of a not-so-stellar reputation. However, a new survey suggests that insurers are paying closer attention to customer service.
For the second year in a row, The Temkin Group, a customer research and consulting company, has released its annual Trust Ratings. The ratings are the result of a nationwide survey conducted in January 2012 that asked 10,000 consumers to evaluate more than 200 companies in 18 industries.
According to Bruce Temkin, founder and managing partner of the company, consumers were asked to rate their likelihood to trust companies to meet their needs on a seven-point scale — 1 meaning they do not trust the company at all and 7 meaning they trust the company completely. And guess what? When all was said and done, the insurance sector did surprisingly well.
Customer service is ‘expectation’
“Consumers need to believe that the insurance company will support them if they ever have a claim. Insurance is quite unique that way,” Temkin says. “The most important service is also the key value for consumers, but very few of them actually experience it. So all of the other aspects of customer service need to make the consumers feel as if they will be treated well if they ever have to put in a claim.”
Between the 2011 and 2012 surveys, the insurance industry made more significant improvements than any other sector, earning more than a 5 percent gain in overall customer trust. And while five companies scored “poor” ratings — Travelers, 21st Century, MetLife, American Family and Liberty Mutual — two insurers (Farmers and Allstate) made double-digit gains. Furthermore, eight other insurers climbed in the rankings.
“Customers now drive the business, and that’s really becoming a part of the culture for the insurance industry across the board,” State Farm spokesman Dave Phillips says. “Customer service is now an expectation, not a nicety.”
According to Temkin, insurers were evaluated, in part, on how efficiently their customer service departments functioned, how accessible they were to consumers and what emotional effect the company’s customer service departments had on consumers. The results were as follows:
• Taking top honors was USAA, which beat all other companies in every industry category to score a 78 percent consumer trust rating — a 30 percent improvement over the standing in 2011.
• USAA, State Farm and The Hartford received the highest functional ratings, while Liberty Mutual, American Family and 21st Century received the lowest.
• USAA, State Farm and The Hartford received the highest accessible ratings, while 21st Century, MetLife and Travelers received the lowest.
• USAA, State Farm and AAA received the highest emotional ratings, while 21st Century and Travelers received the lowest.
Seven insurers landed in the “OK” category — AAA, Allstate, Farmers, GEICO, Nationwide, Progressive and The Hartford — and the industry overall found itself in the middle of the pack, ranking eighth among 18 other industries.
“I like to say that customer service in the insurance industry is now finally sitting at the big kids’ table,” says Seth Hall, vice president of customer service at Philadelphia Insurance Cos., (which was not ranked in the survey). “Customer service is no longer just some necessary evil. It’s at the center of making businesses more profitable.”
John Tschohl is president of the Service Quality Institute and author of several books on customer service. While insurance companies always have spent millions of dollars a year on advertising, he says, only recently have they begun to see the financial value in customer service. After all, he says, when you’re dealing with an industry where each company sells essentially the same products, high-quality service will separate one insurer from another.
“When I first started in 1979 in customer service, I saw companies spending a fortune in marketing and ads. But then when people walked through the door, they got treated like dirt,” Tschohl says. “But if you treat people like kings and queens, they give you their money. It’s a simple concept.”
Let me speak to a human
Michael McIntyre, president and CEO of The Authentic Salesman, a Dallas-based consulting and sales training firm, says customer service in the insurance industry has changed for the better and for the worse.
On the plus side, he says, more companies are adopting a “customer first” approach and putting their money where their mouth is. For instance, USAA, State Farm and The Hartford constantly train all of their employees while also rewarding excellence in customer service, McIntyre says.
“However, the old guard is still running other company’s customer service centers directly into the ground,” McIntyre says.
They have done this, he says, by relying too heavily on intelligent voice recognition (IVR) systems or, worse yet, outsourcing customer service to the other countries.
“Consumers don’t want to be put on hold or talk to an IVR,” McIntyre says. “They want a human being, they want interaction, and they want an authentic conversation.”
Social media raises the stakes
Mike Barry, a spokesman for the nonprofit Insurance Information Institute, says the Internet probably represents the single biggest change in the way companies approach customer service.
“You now have customers interacting with their insurance company without ever talking to them and, perhaps more importantly, you have customers interacting with one another,” Barry says.
According to Dan Young, head of insurance relations at CarStar and a former 20-year employee of Allstate, the constant and growing presence of social media has placed much-needed pressure on the industry to deliver a positive customer experience.
“If you do a great job there are great rewards. But if you blow something, there are a lot of people who can know about it in a big hurry,” Young says. “You now run the risk of a poor reputation spreading quickly, which means possibly losing current and future customers.”