Long repair-shop backlogs and lingering parts shortages have caused the average auto insurance repair cycle time to reach 23.1 days this year, up by 6.2 days from 2022, and more than double the average repair time in 2021.
But this delay does not seem to have adversely affected customer satisfaction. In fact, customer satisfaction with the auto insurance claims process improved this year, because of efforts by insurers to carefully manage customer expectations, according to the J.D. Power 2023 U.S. Auto Claims Satisfaction Study.
“It’s really a testament to strong client management processes and improved digital communications,” said Mark Garrett, director of global insurance intelligence at J.D. Power.
“Insurers have been able to earn significantly higher auto claim satisfaction scores at a time when costs and rates are rising—even though it’s never taken longer to get a vehicle repaired. ,” he said, adding, “Notable, too, is that insurers that have improved the most in overall satisfaction have done so in two key customer areas: showing concern for their situation at the beginning of the process and keeping them informed. Being empathetic toward the customer situation goes a long way in building trust with them.”
Other key findings of the survey include:
Overall satisfaction improves across most aspects of claims experience: Overall satisfaction with the auto insurance claims process this year rises 5 points (on a 1,000-point scale) to 878. This increase is driven by improvements in nearly every factor, including settlement; first notice of loss; claim servicing; estimation process; and repair process. The only factor to decline this year is rental experience, which falls 2 points.
Repair-cycle times are now longer than ever: This year’s improvement in overall satisfaction comes despite the fact that it is taking longer for vehicles to be repaired. The average repair cycle time from first notice of loss (FNOL) to returning the vehicle to the claimant is now 23.1 days, an increase of 6.2 days from 2022 levels. The pre-pandemic average cycle time was 12 days.
Slow repair cycles affect rental car satisfaction: An increasing percentage of customers say their rental period is not long enough or that they are incurring out-of-pocket expenses, which is having an adverse effect on rental car satisfaction. Overall rental satisfaction for repairable claims falls 32 points when the car is needed for 15 days or more.
Aligning processes to customer preferences plays a key role: Digital interactions are also driving an improvement in satisfaction, but primarily among those who prefer digital channels. Satisfaction declines among customers who prefer more personal interactions but are directed to digital processes. Aligning processes to preferences is key as customers increasingly want personal interactions—and doing so results in increased satisfaction.
The study also said that Amica Mutual ranks the highest in overall customer satisfaction for a second consecutive year, with a score of 909. Erie Insurance (902) ranks second, and NJM Insurance Co. (900) ranks third.
Reasons for the delays
So, what are the causes for these repair-shop backlogs and lingering parts shortages? Why are repair-cycle times longer than ever? According to Garrett, the two main drivers of shop backlog are supply chain and labor shortage. “The supply chain is still recovering from the pandemic when plant closures limited parts; so, the shortage/delays are still happening. And the collision industry as a whole is facing a technician shortage. As the older generation of techs retire, there are fewer younger techs to take their place,” he said.
Another contributing factor, but not as prominent as the other two, is that the vehicle fleet is aging (the shortage of new vehicles, combined with higher prices, caused more people to hold onto their vehicles longer), Garettt added. As a result, there is a higher demand for repair services. These are all contributing factors to why the overall claim cycle time is now taking longer. So, delays from getting the car into the shop and the actual repair times are both lengthening due to these factors.
Although there are efforts like President Biden’s CHIPS Act to improve things, the impact of this initiative will be too far off to impact the immediate delays, explained Garrett. “Building new microchip plants and ramping up production takes time; so, while I think this can have an impact on strengthening the supply chain, it won’t be felt any time soon,” he said.
As these delays persist, it is surprising that consumers are not more upset with the slow repair time. Are they perhaps learning to live with them? “I think that is part of the explanation,” Garrett said. “There has been more time passed for people to accept that this is the way things are now – the “new norm.”
Also, Garrett explained, during the early days of these auto repair delays, insurers were slow to adjust their process and explanations to customers to help manage their expectations.
But this year’s data show that insurers are doing a better job now of managing expectations and setting more accurate timing expectations (they’ve had more time to adjust talk-tracks and explanations). But ultimately, he said, “customers want to know what’s going on and the increasing digital communications have helped customers feel the communication is better coming from their insurer as well. This is helping to increase satisfaction.”
However, consumers are starting to see some relief in the long auto repair delays, said Garrett, as both shop backlog and the number of average rental car days declined from Q1-Q2 ‘23. The average length of rental was down 1.3 days in that period (18.7 vs. 17.4 days from Enterprise) and shop backlog (the average wait to get into a shop) from CRASH reports show an eight-day improvement from 5.8 weeks in Q1’23, down to 4.7 weeks in Q2 ’23.
Improving customer satisfaction
The industry can take several steps to increase customer satisfaction, Garrett said. Among other things, it can:
Continue to improve communication with customers and manage expectations. “We see lower scores for availability of claims reps and responsiveness, so these are key issues to customers—being able to reach someone quickly and hear back in a timely manner,” he said.
Utilize email/text alerts and communicate through these channels to keep customers informed throughout the claim process. “Provide a balance of technology and human interactions that align with customer preferences as not everyone wants to communicate/service through digital channels,” he said.
Continue to develop/implement digital solutions that move the claim along more quickly while keeping the process simple and efficient (limit customer effort).
Perhaps most importantly is to express concern and empathy to customers, Garrett said.
The award winner, Amica, separates itself from the industry by keeping customers informed and showing concern for them. “The insurers that improved the most in this year’s study had their biggest improvement in showing concern,” he said.
The 2023 U.S. Auto Claims Satisfaction Study is based on responses from 9,659 auto insurance customers who settled a claim within the past nine months before participating in the survey. The study excludes claimants whose vehicle incurred only glass/windshield damage or was stolen, or who only filed a roadside-assistance claim. The study was fielded from September 2022 through August 2023.
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.
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