Small commercial insurance carriers pin customer retention on trust
J.D. Power: Thirty-six percent of small businesses experienced a premium increase in 2024.
When small businesses trust their insurance providers, overall satisfaction, loyalty and brand advocacy go up, according to a recent study by J.D. Power.
Small commercial insurance customer retention relies on trust, the data showed, despite 36% of small business owners reporting premium increases over the past year. Among small businesses with the highest levels of trust in their insurers, 81% say they “definitely will” renew with their carrier, and 79% say they “definitely will” recommend their carrier.
“Trust is the single most important variable in the customer relationship with commercial insurance providers,” said, Stephen Crewdson, J.D. Power’s senior director of global insurance intelligence.
“Across virtually every business metric that matters to insurers — customer loyalty, advocacy, premium retention and share of wallet — small business owners who trust their insurers represent significantly higher value,” he added. “While some insurers are doing a great job cultivating that trust, others have a lot of work to do.”
Key findings from the study include:
- Trust is a key value driver for commercial insurers. Overall small business customer satisfaction with commercial insurers is 697 (on a 1,000-point scale). Among customers who have the highest levels of trust in their insurance providers, overall satisfaction jumps 180 points to 877.
- Trust varies widely among small commercial insurers. Insurers that achieve the highest levels of trust help customers understand policy coverage while personalizing products to their specific business needs.
- Premiums are increasing. Overall, 36% of small businesses experienced a premium increase this year, up from 34% in 2023. Of those, 51% of increases were initiated by the insurer, 16% were the result of changing business needs and 13% were due to a change the customer made to their policy.
- Understanding reasons for premium increases is critical to maintaining trust. When customers completely understand the reasons for a premium increase, trust is 142 points higher than when they do not understand.
- Know your customer. Overall, 55% of commercial insurance customers say they’ve received information personalized to their business from their insurer, which in turn drives an average overall trust score of 761.
Among insurance carriers, J.D. Power ranks American Family the highest in overall customer satisfaction with a score of 727, State Farm ranks second and Allstate is third, according to J.D. Power.
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