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Customer satisfaction drops for health insurance

health-insurance-satisfaction-2010Customers are less satisfied with health insurance than a year ago, but are just as happy or slightly more satisfied with life and property/casualty insurance, according to the latest annual report on financial services by the American Customer Satisfaction Index.

After two years of gains, customer satisfaction with health insurance fell 2.7 percent to an index score of 73. Meanwhile, customer satisfaction with life insurance gained 1.3 percent to an index score of 80, and property/casualty insurance customer satisfaction remained flat, also with a score of 80.

The American Customer Satisfaction Index, founded at the University of Michigan's Ross School of Business, is a national indicator of consumer evaluations of products and services in the United States. The index releases annual results for different sectors of the economy each month.

Life and property/casualty insurance consistently score better than health insurance, but that doesn't necessarily mean health insurance companies provide poorer customer service, says American Customer Satisfaction Index Managing Director David VanAmburg.

"With property/casualty and life insurance, your interactions tend to be far less than with health insurers," he says. "The fewer interactions you have with customer service, the fewer chances that something will go wrong, even if the service is good."

Small insurance companies earn customer goodwill

VanAmburg attributes the recent customer satisfaction decline with health insurers to increasing premiums and employers passing on a greater portion of medical insurance costs to employees. He says that customers may feel like they're paying more without receiving greater value.

Among health insurers, smaller companies, whose scores are aggregated to one score of 77, come out on top.

"There is a smaller-is-better phenomenon," VanAmburg says. "Smaller companies are associated with a greater focus on the individual customer's needs."

This holds true for life insurance and banks, too.

Blue Cross and Blue Shield's score dropped 4 percent to 70, but remained ahead of other large insurers. Wellpoint was the only large insurer that showed improvement; its score climbed 3 percent to 69. Aetna's score fell 3 percent to 68, and UnitedHealth dropped 10 percent to an industry low of 65. The only other index-rated industries with such weak scores are bottom-ranked airlines and subscription television services.

One reason for UnitedHealth's low score could be its increase of premiums for Medicare prescription drug plans and phasing out its popular MedicareRx plan. UnitedHealth is a big player in Medicare prescription drug plans, and its customers -- retirees on fixed incomes -- are especially sensitive to premium increases, VanAmburg says.

Property/casualty and life insurance fare better than health insurance companies

State Farm remains on top among property/casualty insurers with a score of 82 for the second consecutive year. Geico is No. 2 with a score of 81, followed by aggregated small insurers with a score of 80. Progressive is fourth, with a score of 79, followed by Allstate with a score of 78, and Farmers with a score of 76. VanAmburg says Farmers may struggle for higher scores because it maintains a strong concentration of business in California and Gulf Coast states, where customers face weather-related claims and economic challenges.

"California is a tough state when it comes to customer satisfaction," VanAmburg says. "We tend to see lower customer satisfaction scores there for any type of industry."

Generally customer service scores for any type of product are highest in the South and lowest in the Northeast and on the West Coast. Although the Gulf Coast areas are in the South, the region gets pummeled by hurricanes, which, of course, impact property insurers and their customers.

Among life insurance companies, the aggregate of small insurance companies is No. 1 with a score of 81. Northwestern, with a score of 80 is next, followed by MetLife, 78; New York Life, 78; and Prudential, 77.

Life insurer premiums are usually fixed, and customers may have few or no interactions with their companies again once policies in place -- a benefit when it comes to maintaining high customer satisfaction scores, VanAmburg notes.

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