Insurers concentrating on commercial lines are less successful in satisfying small-business customers than those that predominantly write personal lines, according to the “2014 U.S. Small Business Commercial Insurance Study,” from J.D. Power.
The study examines customer satisfaction, insurance shopping and purchasing behavior among small-business commercial-insurance customers, defined as those with 50 or fewer employees. For the sake of the survey, overall satisfaction is comprises five factors: interaction; policy offerings; price; billing and payment; and claims.
Of the insurers that rank higher than the industry average this year, all six are primarily personal-lines providers, which scored higher than commercial-focused insurers across all five factors. Among small business customers, overall satisfaction was 783 on a 1,000-point scale, which is up 6 points from 2013. Companies such as Allstate and State Farm, which concentrate on personal lines, have an average overall satisfaction score of 804 overall. Satisfaction with insurers that focus more broadly on writing commercial insurance, such as CNA Insurance and Zurich, averages 766.
"While both groups show year-over-year improvement, insurers that predominantly write personal lines insurance benefit from the personal relationships they are better able to build with their small-business customers," said Jeremy Bowler, senior director of the insurance practice at J.D. Power. "The relationship is typically established early because small-business owners often purchase commercial insurance from the same agent that provides their home and auto insurance. Additionally, the agent is often local, so they have more personal contact with their customers and better understand their business."
According to J.D. Power, 41 percent of customers of predominantly personal lines insurers had their personal insurance with the insurer and later added their commercial lines. For customers of commercial lines insurers, this occurred 12 percent of the time.
All insurers benefit from offering highly satisfying customer experiences, which result in increased customer loyalty and advocacy, J.D. Power said.
“Among delighted’ customers (overall satisfaction scores of 900 or higher) of personal lines-focused insurers, 79 percent say they definitely will’ renew their policy with their current provider, and 81 percent say they definitely will’ recommend their provider to family and friends. Among delighted’ customers of primarily commercial providers, 70 percent indicate they intend to renew and 72 percent provide recommendations,” J.D. Power said.
Highlights from the report:
- Among the 5 percent of customers who experienced decreasing premiums in 2014, price satisfaction improved points compared with last year.
- Among the 64 percent of customers who experienced flat insurance premiums in 2014, price satisfaction increased by 18 points.
- Among the 31 percent of customers who experienced price increases, price satisfaction declined slightly.
“Among the 25 percent of customers who experience an insurer-initiated rate hike, price satisfaction declines by 6 points, while satisfaction drops by 3 points among the 6 percent of customers who experience a premium increase for a policy change due to something they initiated, such as adding a new store,” J.D. Power said.
For customers of personal lines-focused insurers, two-thirds said they had met with their agent in person, compared with 53 percent of those insured by a more commercial-focused insurer.
And, 32 percent of customers of predominantly commercial insurers, and 24 percent of customers of predominantly personal lines insurers, have had no interaction through any channel with their insurer in the previous 12 months.
“Satisfying customers has an economic impact on insurers. For example, delighted’ customers of predominantly commercial insurers purchase 1.5 additional products and pay more than$2,000 in annual premiums, compared with dissatisfied’ customers (overall satisfaction scores of 549 or lower),” J.D. Power said.
For the second-consecutive year, Erie Insurance ranked highest among small-business commercial insurers with a score of 813.
Erie performed particularly well in the policy offerings and billing and payment factors, J.D. Power said.
Nationwide and State Farm tied for second, each with a score of 809. Nationwide performed particularly well in interaction and price. State Farm performed well in policy offerings and billing and payment.
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