Investigating and Improving Customer Experience for a Large Insurance Company

Executive Summary

A large property and casualty insurance company experienced a decline in Customer Satisfaction (CSAT) scores over several months, raising concerns about potential long-term impacts on retention and brand reputation. While the entire industry was experiencing reduced customer satisfaction scores related to price increases, the company wanted to ensure it was doing everything else it could to keep its client base engaged. Our team was engaged to investigate the root causes of the decline and recommend actionable solutions. Through a comprehensive analysis, we identified key drivers impacting customer satisfaction, including rate increases, service quality, claims experiences, external events (such as natural disasters), and servicing challenges. Here we outline our approach and how we helped the client achieve the best possible results given the situation they were in.

Problem Statement

The client had noticed a steady and concerning drop in their Customer Satisfaction Score (CSAT) over a six-month period. This decline posed risks to their competitive position in the market, with potential downstream effects on member retention, premium revenue, and overall brand perception. While the entire industry was facing downward pressure on CSAT, the client wanted to get ahead of this concern, ensuring they understood the root causes and their implications. The client wanted a structured, data-driven approach and needed actionable solutions in a timely manner.

Approach

Our investigation followed a structured methodology with the following steps:

1. Data Collection & Review:

• Gathered member feedback data, including survey score responses, verbatims, and satisfaction ratings for specific products and experiences.
• Collected operational data on policy renewals, rate changes, claims volumes, and servicing metrics.
• Reviewed external factors, such as weather events and natural disasters.

2. Hypothesis Development:

• Based on initial data review and industry experience, we identified key hypotheses for the decline in CSAT, knowing there were likely compounding and confounding factors: Recent industry-wide rate increases leading to dissatisfaction. Poor interactions with member service representatives. Delays or negative experiences in claims processing. Increased frequency of natural disasters, especially hurricanes and severe storms. Frustration with other servicing options such as digital channels. Variability in satisfaction based on demographic of survey responses.

3. Root Cause Analysis:

• Conducted deep dives into each hypothesis using a data-driven approach analyzing survey data, verbatims, customer demographics, rates, and customer location.

4. Recommendations Development:

• Created targeted, actionable recommendations to address the root causes.

Findings

1. Rate Increases

• Significant rate hikes were implemented over the last several renewal cycles, particularly in regions affected by recent weather-related losses. Members in these areas experienced a disproportionate impact of both rate increases and CSAT decline.
• Surveys confirmed that price sensitivity was a top concern for members with auto and homeowners insurance products.
• While rate increases are necessary due to adjusted expected future losses in certain segments, we found certain segments of the population had more of an impact on survey results than others. (i.e. older and longer tenured customers)

2. External Events (Natural Disasters)

• The timing of the CSAT decline aligned closely with a spike in claims resulting from hurricanes in Florida, severe storms across the South, and wildfires in California.
• While natural disasters are beyond the company’s control, they increase the cost of doing business in those locations as well as those with similar risk profiles.

3. Weighting Survey Population

• The results of calculating the CSAT score relied on weighing the survey response population to match the customer base.
• Some customer segments (especially younger generations) tended to score the company lower than others while also returning the fewest surveys
• This resulted in weights being significantly high for those segments of the population

4. Customer Service Quality

• Analysis of call center data revealed little/no change or degradation in First Call Resolution as well as member impacting metrics such as abandon rates and handle times.
• Survey analysis indicated that customers were still very happy with their interactions with the company at the same rate as before the decrease in CSAT.
• This further indicated that rates increases were the primary driver of decreases in satisfaction.

5. Claims Processing

• Claims satisfaction scores during the observation period actually increased during this period as customers, while in an undesirable situation, were satisfied with how the company resolved their claim.
• This finding indicates that claims servicing was not a contributor to the decrease in satisfaction.

Adjusted Findings Based on Recent Analysis

The majority of respondents consisted of younger generations, leading to adjustments in the scoring model to better represent the overall population. To prevent overcorrection from small sample sizes, we recommended caps on score adjustments.

We confirmed that the primary driver of dissatisfaction was rate increases, driven by higher claims resulting from natural disasters. While the company was unable to reduce rates due to modeling expected future losses based on specific segments, we stressed the importance of improving communication with members, clearly explaining why rates had risen. Servicing and claims processing were found to have minimal impact on the overall drop in member satisfaction.

Recommendations

1. Rate Increase Communication Strategies

• Introduce proactive communication explaining the reasons for rate increases and highlighting available discounts or loyalty programs.
• Measure responses to these programs and how they impact future scores for these customers

2. Enhance Member Service Training and Processes

• Conduct training with front line agents so they are aware of upcoming rate increases and best practices for customer communications.
• Establish a feedback loop where frontline staff can share insights on recurring customer pain points especially related to rates.

3. Weight caps on Segments with Lower Populations

• Consistent with industry practices, we recommend placing weight caps on adjustments made to reflect the customer base.
• This eliminates the possibility that segments with a small response rate will artificially raise or lower the CSAT score.

Conclusion

By addressing the key drivers of the Customer Satisfaction decline, the insurance company can not only recover lost ground but also build stronger long-term relationships with its base. Implementing the recommended changes requires cross-functional coordination, but the potential benefits to improved member retention, positive word-of-mouth, and competitive differentiation are significant.

In this case the client immediately adjusted its overall scorecard metrics and performance expectations to better reflect what Servicing Operations has control over and what they do not. Additionally they developed and prioritized an approach to implement Spinnaker’s broader recommendations.

When you are ready to dig deeper into the underlying aspects of your company's customer satisfaction, reach out to Jim Peters or Stephanie Brooke Lennon to discuss how Spinnaker can help you succeed.