December 10, 2013

Bank Customer Satisfaction Returns to Prerecession Levels

Customers happier with their banks despite higher fees, survey says

JPMorgan has the most satisfied customers among big banks. (Photo: AP) JPMorgan has the most satisfied customers among big banks. (Photo: AP)

As the stock market has hit new highs, so too has customer satisfaction with banks and insurers.

The American Customer Satisfaction Index reported Tuesday that the index was up 0.3% to 76.7 on a 0–100 scale.

The ACSI Finance and Insurance Report 2013 was based on interviews with 5,296 customers, chosen at random and contacted via telephone and email between July 10 and Sept. 4.

Participants were asked to evaluate their recent experiences with financial services — including banks, credit unions, health insurance, property and casualty insurance and life insurance — provided by the largest companies in terms of market share, plus an aggregate category consisting of “all other” — and thus smaller — providers.

Banks and Credit Unions

Overall customer satisfaction with retail banking returned to its prerecession level, growing by 1.3% over the past year to an ACSI benchmark of 78.

“Even though banks have raised fees again, the 15th straight year of such increases, no negative repercussions have been detected regarding customer satisfaction,” Claes Fornell, ACSI’s founder and chairman, said in a statement.

“In part, this is because a fair number of consumers are changing their behavior to avoid the fees by exclusively using their own bank’s ATMs and maintaining sufficiently large account balances.”

All of the big banks improved, but smaller ones far outdistanced their larger competitors, up 5% to 83, as did credit unions, up 4% to 85.

Among the four largest banks, JPMorgan Chase held on to its lead with a 3% gain to 76, while Citigroup jumped 6% to 74, and Wells Fargo inched up 1% to 72.

Bank of America registered its largest improvement in a decade, up 5% to 69, but remained in last place. It was the only bank that had yet to restore its prerecession level of customer satisfaction.

Banks and credit unions received good marks for their customer service at branches and for online banking. But customers gave a failing grade to the competitiveness of bank interest rates, while credit union customers complained about the lack of convenient ATMs and branches.

Insurance

Customer satisfaction with health insurance was up 1.4% to an ACSI benchmark of 73. High premiums, out-of-pocket expenses and complicated policies contributed to relatively low satisfaction compared with other financial services.

“The health insurance industry is in a state of flux as many parts of the Affordable Care Act come into effect, including insurance exchanges, which allow consumers to comparison shop for health care coverage,” ACSI director David VanAmburg said in the statement.

“The customer satisfaction gains this year may be driven in part by expected price competition as health insurance companies anticipate the effects of the new online marketplace.”

In addition to possible increased price competition, health insurers have an opportunity to distinguish themselves by competing on customer satisfaction, the report said. At present, there is little differentiation, with most companies clustered around the industry average.

The Blue Cross and Blue Shield Association led with an ACSI score of 74, while WellPoint matched the industry average of 73. The aggregate of smaller insurers such as Cigna and Humana remained just below average at 72. UnitedHealth was stable at 70, while Aetna held the bottom spot at 69.

Customers showed disdain for most aspects of the health insurance experience. Although most policies provide reasonably good access to hospitals and primary and specialty care doctors, customers thought coverage of services, particularly prescription drugs, could be better. They found billings fairly difficult to understand. And they gave low marks to both insurance websites and call centers.

In the latest index, customer satisfaction improved for both life and property and casualty insurance. Life insurance was up for the second consecutive year, to 83. Despite annual rate increases, customer satisfaction with property and casualty insurance also rose, to 81.

Customers were more satisfied with auto insurance than homeowners insurance, although customers with multiple policies from the same insurer expressed the highest level of satisfaction.

Increased customer satisfaction with property and casualty was the result of large gains for smaller insurance carriers, a group that includes AAA and Nationwide, up 8% to 83.

Among the largest property and casualty insurers, only Geico improved, up 3% to 81, taking the top spot from State Farm, down 2% to 79, and Progressive, down 4% to 78. Allstate fell by 3% to 77, and Farmers dropped by 4% to 76.

Smaller life insurance companies, such as John Hancock and Lincoln Financial, also tended to have higher customer satisfaction than big providers, leading with an 83 aggregate score.

Among the large companies, New York Life remained on top, unchanged at 80 for a third year in a row. Northwestern Mutual and Prudential tied at 78, and MetLife was at 77.

Policy holders of property and life insurance gave firms high marks for their customer service and the variety of coverage options, but were frustrated by the unavailability of meaningful policy discounts and rewards.

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