Pru, MetLife see service declines, index finds

Feb 27, 2006 @ 12:01 am

By Gary S. Mogel

NEW YORK - Life insurers provided slightly above average customer service in 2005 compared with other industries, but two insurers' service capabilities plunged against 2004's strong results.

Customers of Prudential Financial Inc. and MetLife Inc. don't get enough satisfaction.

Scores of MetLife (71) in New York and Prudential Financial (72) in Newark, N.J., declined in 2005 by 7.8% and 6.5%, respectively. Both companies were among the top performers in the life insurance sector in 2004.

Those were among the findings of the "American Customer Satisfaction Index," released last week by the American Society for Quality in Milwaukee and the University of Michigan in Ann Arbor. The index ranks customer satisfaction for 200 companies, including those in the financial, retail and e-commerce industries.

Surprising results

"We are certainly surprised by these results," said Holly Sheffer, a spokeswoman for MetLife.

"We haven't seen the survey results, or explanatory or supporting data, and, therefore, we decline to comment," said Jim Gorman, a spokesman for Prudential.

Life insurance companies and banks both scored 75, the same as last year and slightly above the 73.5 total for all industries combined.

Scores were calculated based on formulas and don't represent percentages of satisfied customers.

"Part of what the customers say is subjective, but subjective information can drive stock prices and economic growth," said Claes Fornell, director of the University of Michigan's National Quality Research Center. "Some say that perception is reality, and vice versa."

"A decline in service and increase in premiums are pretty sure to make customers upset," said Mr. Fornell, referring to MetLife and Prudential. "Customers are perceiving that prices are going up relative to the coverage and the total package they are receiving from these companies."

"Our latest survey of over 90,000 policyholders found that their understanding of key product features exceeded 98%," said MetLife's Ms. Sheffer, disputing the index. "About 98% were satisfied with the sales process. In addition, the number of marketing-related customer complaints dropped by 14% and are at the lowest level in over 20 years." A low or declining score doesn't necessarily mean that the company isn't trying to improve the quality of services.

"Some quality improvement techniques are more focused on internal systems for operational efficiency and productivity, and aren't noticed by the consumer

at all," said Jack West, past president of the American Society for Quality.

MetLife and Prudential - companies owned by stockholders - were "more driven by the pressure to generate quarterly results in line with investor expectations," the report accompanying the index speculated. Policyholder-owned mutual insurers, such as Northwestern Mutual Life Insurance Co. in Milwaukee, generally scored higher than the investor-owned companies.

Winners and losers

Despite well-reported customer griping about how hurricane claims were settled, property-casualty insurers scored 78 - the highest among the three insurance sectors.

Banks that minimized ticking off customers through unfairly denying loans and raising interest rates on credit cards scored well. Wachovia Corp. (79) in Charlotte, N.C., ranked the highest.

The most significant 2005 bank decline was for Wells Fargo & Co. in San Francisco - down 4.3% from 2004. Its score of 67 was the lowest for any bank since 2001 - possibly because disruption from integrating acquisitions caused service to decline, the report noted. Many banks were involved in consolidations during the past several years, but Wells Fargo was especially active, Mr. Fornell pointed out.

Online retailers scored the highest (81), with the web-based booksellers doing especially well. Stockbrokers' online trading operations scored 76, down a point from 2004 and considerably lower than other types of companies that provide their services mainly via the Internet.

0
Comments

What do you think?

View comments

Upcoming event

Nov 19

Conference

New York Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

INTV

Schwab's Jeff Kleintop: Prep for volatility given China trade uncertainties

China could be considered a developed market in five to seven years , according to Jeff Kleintop, chief global investment strategist, Charles Schwab.

Latest news & opinion

TIAA exits the life insurance business

The move is a big deal for RIAs, experts say, since TIAA was one of only a few insurers to offer fee-only life policies.

Advisers step up efforts to help clients manage student loan debt

As some Democrats campaign to wipe the slate clean, financial planners focus on limiting the amount students borrow.

Funding for Reg BI, other SEC advice reform efforts denied in Waters amendment

House likely to approve measure that effectively kills rule package, but it faces uphill battle in Senate

Wall Street lashes out at Sanders' plan to pay off student debt with a securities trading tax

Financial pros argue that a transaction levy will hurt mom-and-pop investors along with investment houses.

GPB paid B-Ds and reps steep commissions to sell troubled private placements

GPB paid commissions of 9.3%, or $167 million altogether, on the firm's private placements.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print