Rating Insurance Partners
Report Examines Risk Manager Satisfaction
Risk professionals who focus on enterprise risk management (ERM) are less satisfied with their insurance partners than non-ERM risk professionals, according to new research.
The 2014 Commercial Insurance Report — Special Report Snapshot is the first annual customer satisfaction survey conducted by the Risk and Insurance Management Society (RIMS) and J.D. Power. The full report is due to be released in February.
Overall, risk professionals at large businesses were most satisfied with their brokers (854 on a 1,000-point scale), followed by satisfaction with property insurers at 821, auto at 811, and workers’ compensation at 746.
Risk professionals at small businesses ranked satisfaction with insurance at 783.
As for ERM versus non-ERM professionals, the survey found that risk professionals with ERM responsibility scored workers’ compensation the weakest at 541 on a 1,000-point scale. That was 238 points lower than their counterparts without ERM responsibility.
Risk professionals with ERM responsibilities also ranked brokers (at 828 points) 56 points lower than their counterparts without ERM responsibility.
Of the nearly 1,000 risk professionals who participated in the study, 40 percent have at least some ERM responsibilities.
That’s an unexpectedly high number, said Carol Fox, RIMS director of strategic and enterprise risk and the report’s co-author.
More Than Transactions
As senior leadership begins to accept the benefits of enterprise risk management, the relationship between the risk professional and the company’s brokers and insurers assumes more than a simple transactional role, she said.
“ERMs are charged with coming up with ideas and solutions for risks that may not be insurable,” she said. “This is where insurers and brokers can help.”
For example, she said, the World Economic Forum recognizes water shortage as a global risk. The insurance partner of a business that depends on a plentiful water supply, such as a pharmaceutical or beverage company, could provide scenarios and analytics to help risk professionals and their organizations understand the risks.
“If a water shortage is anticipated within the strategic horizon, maybe 10 to 15 years, the broker or an engineer on the insurer’s team could help the company’s risk professional make plans.”
In one case, she said, a pharmaceutical company located on a body of salt water built a desalination plant. “The broker can provide those analytics and make recommendations.”
The different findings from survey findings from risk professionals with and without ERM responsibilities suggest that insurers and brokers are not meeting the more strategic and complex responsibilities of ERM professionals, said Timothy Bebout, commercial insurance practice leader at J.D. Power, who also co-wrote the report.
“If the brokers or insurers aren’t involved in the strategic discussions about, say, new locations or staffing, they won’t have a holistic view of their customers’ needs,” he said.
Fox also noted that there was a “significant delta” in customer satisfaction between broker-only relationships and triangular relationships that also includes the insurer.
The survey found that overall satisfaction fell by 100 points when a property insurance representative, such as an engineer or underwriter, was not involved during both a service interaction or claims process.
“Large commercial buyers really want to get in front of the underwriter to build a trusting relationship,” Fox said. “They want to work directly with the insurer’s engineers and claims adjusters — and that takes face-to-face meetings.
Clients also want direct meetings with brokers, she said. Overall satisfaction declined by 73 points among clients that didn’t have at least two in-person interactions, the report found.
Bebout said that interaction between the risk professional and insurer was the second-rated factor driving overall customer satisfaction across coverage lines.
The highest rated factor driving satisfaction in property lines was program offerings, while claims drove satisfaction in the workers’ comp line. For auto, it was price that satisfied the most risk professionals.
The study measured separate satisfaction scores for insurers and brokers, which were then weighted by importance and aggregated into composite scores, said Colleen Cairns, manager, insurance industry analytics, J.D. Power.
Insurers were scored on five factors: interaction; program offerings; price; billing and payment; and claims.
Brokers were scored on four factors: ease of contacting; reasonableness of fees; advice and guidance in selecting program offerings; and timeliness of resolving contact.
Respondents were employed by companies with $100 million or more in annual revenue that purchased a commercial property, workers’ compensation, or auto policy with a profiled insurer or broker.