Since the Covid-19 pandemic hit our shores in early 2020, the insurance industry has experienced a digital transformation. Customers’ ability to avoid face-to-face meetings, file claims online, and generally “do-it-themselves” has been disruptive for those lagging in tech adoption.

“Claims-filing through apps has been the biggest technological change of recent years,” said Michael Barry, chief communications officer at the Insurance Information Institute, an industry-funded consumer education organization.

Companies prepared for the transformation have been rewarded with high marks from their clients.

USAA, the San Antonio-based provider of insurance to veterans and their families, received top marks in all five industry categories of the second annual Forbes/Statista survey of America’s Best Insurance Companies.

More than 15,000 participants evaluated their auto, renters, homeowners, term-life and permanent-life insurance providers. Permanent life insurance includes companies offering whole and universal life policies, which include savings element and death benefit. The companies were rated on overall satisfaction in the categories of financial advice, customer service, transparency, digital services, price/performance, damage/benefit and whether respondents would recommend the company to friends and family.

USAA ranked in the top three in all of the industry categories, taking first place in homeowners and renters. Erie InsuranceERIE +0.1% won awards in all five categories. The Pennsylvania company, which was founded in 1925, started out pioneering the auto insurance business and encouraged its customers to call collect by for claims and policy problems. Today it has 6,000 employees and six million customer offering policies in 12 states. Its stock, Erie Indemnity Company (ERIE) is up 16% year-to-date versus a 23% decline for the S&P 500.

“Consistency and a near-myopic focus on our members is what truly sets us apart,” said USAA spokesman Bradley Russell. “We listen to our members, act in their best interest and make business decisions with them in mind.”

Among the winners in homeowners coverage, Farm Bureau Insurance of Tennessee took second place with NJM Insurance third.

In the renters category, Erie Insurance was second and Amica came in third.

USAA is a member-owned association providing insurance, banking, and investment advice to more than 13 million members of the U.S. military, veterans, and their families.

“As a direct-to-consumer business with very little member-facing physical presence, we have integrated technology into everything that we do,” said Russell. “Our members are located all around the world and rely on technology in order to interact with us. In fact, 97% of our member transactions are digital.”

The rapid move to digital has increased service expectations among consumers, forcing companies to adapt or suffer. Clients want certain transactions to be paperless and are partial to the convenience of logging into an app. Yet, other times they want to talk with someone who will listen and provide advice.

“Consumers now expect to be able to do what they want, where they want and when they want—all in the method they prefer, whether it’s digital, over the phone, or in-person,” said Terry Rasmussen, president and chief executive officer of Thrivent, a private financial-services company in Minneapolis.

Thrivent took the top spot in the term-life category. It served 2.3 million clients and held $189 billion in assets under management at the end of 2021. It told Forbes that total revenue last year was $10.3 billion.

USAA came in second place in term life and Farm Bureau Financial Services took third. One reason Farm Bureau insurance companies get good marks is because anyone can pay a low annual fee to join their state’s Farm Bureau–an insurer and lobbying group for U.S. agriculture–and get insurance at a much lower price than rivals charge.

In the Permanent Life category, 132-year-old, Omaha-based WoodmenLife captured first place. Patrick Dees, chief executive of the not-for-profit fraternal life insurance company, attributed its award to its commitment to volunteerism and community support.

Amica scored second place with USAA coming in third.

Fintech Lemonade took the top spot in Auto, with USAA second, followed by Kentucky Farm Bureau Insurance.

As the poster child for digital change, Lemonade (LMND) uses artificial intelligence and bots to sell insurance for much lower premiums. It tightens the link with clients by returning unused premiums to community nonprofits. Despite its popularity with customers, the $171 million (TTM revs) has been bleeding red ink for years. Like other fintechs, its stock performance has been dismal–down 68% in the last year.

In addition to technology, inflation has had a big effect on boh auto and homeowners insurers. Auto providers are paying more for replacement parts and new vehicles. Homeowners’ insurers are paying more for lumber and labor. In addition, the frequency and severity of auto accidents grew last year vs. 2020.

“Insurers have had difficulty making profits,” said Barry of III. “Given the growing dollar amounts of their claim payouts and the volatility in the financial markets, it has become harder to be profitable.”

In addition, severe weather events, such as hurricanes, are increasing in number with claims getting more expensive.

“Insurers are trying to hold the line as everything they pay for goes up. It makes for a challenging environment,” said David Snyder, vice president of the American Property Casualty Insurance Association (APCIA), an industry trade group with 1,200 members. “Insurers right now are facing a unique combination of increasing events with increasing costs for each event. More claims and lower profits are putting pressure on insurers.”