TOKYO: 21 March 2012 — Among customers for which two years or more have passed since the purchase of life insurance, policy cancellation intent differs according to differences in understanding of policy details at the time of purchase, according to the J.D. Power Asia Pacific 2012 Japan Life Insurance After Contract Customer Satisfaction StudySM released today.
The inaugural study measures customer satisfaction with the life insurance company and agent with the life insurance purchase and post-purchase process two years after they purchased their life insurance policy, but have not yet renewed their policy or filed a claim in the past 12 months.
The study finds that approximately 20 percent of policyholders indicate intent to cancel their contracts or "cancellation intent." The proportion of policyholders indicating cancellation intent ranges from 5 percent to 27 percent, depending on the insurance company, which indicates an approximately five-fold difference in the risk of customer switching. This difference in cancellation intent is largely attributable to differences in policyholder understanding of their policy details at the time of policy purchase. For example, customers who understand the terms and details of their policy are less likely to cancel their policy compared to customers who do not fully understand their policy at the time of purchase.
"In addition, cancellation intent tends to increase five or more years after purchase," said Ryutaro Nakao, manager at J.D. Power Asia Pacific, Tokyo. "The finding that cancellation intent doesn't increase even five years after policy purchase among policyholders who thoroughly understand policy details indicates that providing easy-to-understand explanations of insurance at the policy purchase stage is a prerequisite for preventing customer switching."
At the same time, even when policyholders do not fully understand the policy at the time of purchase, insurance companies and agencies have an opportunity to recover. For example, when an insurance company contacts the customer after purchase to explain the details of the policy and reduce the likelihood of cancellation intent. The proportion of customers who say that they thoroughly understand the contract period and coverage amount is 10 percent higher among those who received an explanation of policy details compared with those who did not receive an explanation. In addition, customers who received an explanation concerning claims indicate higher understanding of the claim methods and procedures.
Currently, many insurance companies are bolstering policy explanation activities during customer visits, and approximately 20 percent of the customers indicate that they have received explanations in visits from insurance company representatives during the past year. However, understanding of claim conditions and procedures remains low, even among customers who received such explanations, as only 8 percent of customers actually received information about claim procedures.
"The provision during visit activities by insurance company representatives of in-depth explanations of details on when and how policyholders can make claims deepens policyholder understanding of insurance and is key to increasing trust and loyalty toward insurance companies," said Nakao.
The 2012 Japan Life Insurance After Contract Customer Satisfaction Study includes responses from 6,634 policyholders. The Internet study was fielded in December 2011.
About J.D. Power Asia Pacific J.D. Power Asia Pacific has offices in Tokyo, Singapore, Beijing, Shanghai and Bangkok that conduct customer satisfaction research and provide consulting services in the automotive, information technology and finance industries. Together, the five offices bring the language of customer satisfaction to consumers and businesses in China, India, Indonesia, Japan, Malaysia, Philippines, Taiwan and Thailand. Information regarding J.D. Power Asia Pacific and its products can be accessed through the Internet at www.jdpower.com. Media e-mail contact: email@example.com
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
McGraw-Hill announced on September 12, 2011, its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.
Follow us on Twitter: @JDPower
No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate