Industry, Slideshow, Weekly Digest

Insurers Give Small Businesses Some Love

With the race to the bottom on price in its third consecutive year, insurance providers must reconsider their options for attracting and retaining their small business customers. With price off the table, that leaves insurers with the option of improving service, product or both.

According to J.D. Power, the answer is both. The J.D. Power 2016 U.S. Small Commercial Insurance Study,SM credits improvements in insurer’s customer interactions and policy offerings with driving a 30-point improvement in overall satisfaction among small business commercial insurance customers in 2016.

Overall satisfaction is measured in terms of five key factors (in order of importance): interaction; policy offerings; price; billing and payment; and claims. The study found that interaction improved the most among all study factors, increasing 32 index points from 2015. Satisfaction in all three interaction sub-factors (website, agent/broker and call center) improves significantly in 2016.

For the first time in any study, J.D. Powers found Gen Y customers to be the most satisfied of any group. Satisfaction among this group improved 51 points. Based on the findings, it could be inferred that interaction and communication is most important to the Gen Y demographic followed closely by “Boomers.”

According to the study, higher satisfaction among Gen Y customers is largely driven by interactions with their agent/broker. Gen Y customers indicated having at least two interactions on an annual basis and have more in-person interactions with their agent/broker compared with Gen X and Boomer customers. In addition, these in-person interactions are typically more meaningful, as the study finds agents/brokers are nearly twice as likely to provide advice or recommend changes to Gen Y customers when compared with older customers.

“With few exceptions, insurers are dropping prices, so the best way for them to compete in a soft market is on customer satisfaction,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. “Small business owners are the beneficiaries of being in an attractive market segment of insurance where satisfaction is the key differentiator.”

“Compete based on customer satisfaction.” Words to live by.

Elizabeth Gooding

Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group

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