Index pegs quality of insurers

Middle-market businesses have a new tool by which to measure the quality of their insurers.

Greenwich Associates, a financial services research firm based in Greenwich, Conn., this week is releasing a Carrier Quality Index in response to client requests. The CQI is based on four qualitative measures: client loyalty, claims coordination, competitive pricing and coverage adequacy.

The CQI comprises responses from a survey of 873 companies with sales between $10 million and $500 million and was augmented with information from 14,000 additional middle-market companies, according to Greenwich Associates consultant David Fox. Research for the index began in 2005 and information was updated this year, he said.

The index plots specific insurers' quality scores ranging from 0 to 100 against the percentage of respondents using those insurers (see chart). For example, the 2006 CQI found that Bermuda-based XL Capital Ltd. had the highest quality score but was used by less than 5% of the middle-market companies interviewed. St. Paul, Minn.-based St. Paul Travelers Cos. Inc. was used the most, by nearly 25% of respondents, yet scored close to the middle of the quality score range.

Greenwich has worked with large financial institutions for 30 years, providing research on a variety of topics, and insurance has become one of those topics, Mr. Fox said. To create the CQI, "we talked to a number of carriers and brokers, conducted core research and posed test questions to create a database," he said.

"Traditionally, we thought of middle-market insurance decision makers as not deeply involved in the purchasing" of coverage, said Greenwich Associates Consultant Bill Bruno. "But the recent trend is that decision makers want a lot more information about insurance carriers, areas where carriers are challenged, pricing and claims servicing. If you went back five years ago and looked at the middle market, I don't think you'd see that as much," Mr. Bruno said.

Greenwich plans to release an expanded CQI in early 2007 that will add other measures, such as responsiveness on claims, willingness to pay claims, underwriting expertise and overall satisfaction and will break out measures by line of business, Messrs. Bruno and Fox said.

"The index both measures companies' ability to recommend (insurers) but also gives them pure information. Companies can combine the CQI with what their peers are saying and their brokers are telling them," Mr. Bruno said.

"We have had requests to do something similar in the future for brokers," and Greenwich does plan to develop a benchmark for broker quality, said Mr. Fox.

For more information on the Carrier Quality Index, contact Greenwich Associates at contactus@greenwich.com or call 800-704-1027, option 1.