Insurers that predominantly write personal lines of insurance do a better job in satisfying their small business customers than insurers focused more on commercial lines, according to the J.D. Power 2014 U.S. Small Business Commercial Insurance Study.
The study showed that overall satisfaction among small business customers was 783 on a 1,000-point scale in 2014, up six points from 2013. In addition, the study found that companies that write the majority of their business in personal lines of insurance, such as Allstate and State Farm, had an average overall satisfaction score of 804.
By contrast, satisfaction with insurers that focus more broadly on writing commercial insurance, such as CNA Insurance and Zurich, averaged 766.
All six insurance providers that ranked above industry average in 2014 were primarily personal line providers, and personal lines providers scored higher than commercial-focused providers across all five factors, according to the J.D. Power study.
“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, the 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:
- Among the five percent of customers whose premiums decreased in 2014, price satisfaction improved by 31 points from 2013. Among the 64 percent of customers whose insurance premiums remained the same in 2014, price satisfaction increased by 18 points. Satisfaction with price declined slightly among the 31 percent of customers who experienced a premium increase. Among the 25 percent of customers who experienced an insurer-initiated rate hike, price satisfaction declined by six points, while satisfaction dropped by three points among the six percent of customers who experienced a premium increase for a policy change due to something they initiated, such as adding a new store.
- Nearly two-thirds (63 percent) of customers of personal lines-focused insurers indicated they met with their agent in person, compared with 53 percent of those insured with a more commercial insurer. Additionally, 32 percent of customers of more commercial providers and 24 percent of customers of predominantly personal lines insurers had not had any interaction through any channel with their insurer during the last 12 months.
- Satisfying customers had an economic impact on insurers. For example, “delighted” customers of predominantly commercial insurers purchased 1.5 additional products and paid more than $2,000 in annual premiums, compared with “dissatisfied” customers (overall satisfaction scores of 549 or lower).
The study ranked Erie Insurance highest among small business commercial insurers for a second consecutive year, with a score of 813. Nationwide and State Farm ranked second in a tie (809 each). Nationwide performed particularly well in interaction and price, while State Farm performed well in policy offerings and billing and payment, the study noted.
Learn more: www.jdpower.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].