Dichotomy Emerges in Fastest-Growing Segment of U.S. Property and Casualty Insurance Market
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Costa Mesa, CA (Aug. 7, 2017) – When it comes to customer satisfaction in the commercial insurance marketplace, do not paint all small businesses with the same brush. That’s the central finding of the J.D. Power 2017 U.S. Small Commercial Insurance Study,SM released today. According to the study, the gaps in overall satisfaction among micro- (fewer than five employees) or smaller-size (five-10 employees) small businesses and larger-size (11-50) small businesses have never been wider, with significant year-over-year improvement in overall satisfaction among customers in the larger-size group and sharp declines among customers in both smaller-size groups.
“The small business market has been the best growth area for property and casualty insurance carriers in a stagnant, soft cycle marketplace,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. “Our data shows that the small commercial market is still ripe for competition. While looking at the small business market in aggregate shows relatively steady levels of customer satisfaction year over year, the serious gap between very small businesses and larger small businesses could present an opportunity for those carriers that get the small business formula just right.”
The study, now in its fifth year, examines overall customer satisfaction among small business commercial insurance customers with 50 or fewer employees. Overall satisfaction is comprised of five factors (in order of importance): interaction; policy offerings; price; billing and payment; and claims. Satisfaction is calculated on a 1,000-point scale.
Following are some of the key findings of the study:
- Overall satisfaction scores belie discontent: Overall customer satisfaction in the small commercial insurance market has increased by two index points in 2017 to an all-time high of 825. Satisfaction improves 13 index points among larger businesses (11-50 employees), but declines 18 points among smaller businesses (five-10 employees) and remains steady among the smallest businesses (fewer than five employees).
- Service interactions drive rift: Service interactions, which are the most significant driver of overall customer satisfaction, saw the sharpest declines this year, driven by customer dissatisfaction with agent/broker interactions. Conversely, the claims factor has the greatest year-over-year improvement in satisfaction.
- Multi-channel approach to servicing is key to small business market: The preferred service interaction channels for small business insurance customers are split relatively evenly between agent in-person/phone (61%) and website (57%). These are followed by agent e-mail/text (39%); customer service e-mail/text (27%); customer service phone (26%); and mobile app (9%).
- Demand forself-service grows and outpaces actual usage: The preference for self-service has grown by 28% since 2015 (61% in 2017 vs. 48% in 2015), and continues to outpace actual usage (43%) by a significant margin. Notably, micro businesses have the greatest disparity between preference and usage; their preference for self-service is nearly twice the rate of their actual usage (60% vs. 36%, respectively).
“There is a notable opportunity for insurers of companies in the very small business segment, which are clearly not being serviced at the same level as their slightly larger counterparts,” said Colleen Cairns, senior analyst in the insurance practice at J.D. Power. “The key to effective growth in that slice of the market is a focus on strong agent interactions and smart use of digital and self-service tools designed for the unique needs of businesses where the target customer is often the time-pressed owner of the business.”
Small Commercial Insurance Customer Satisfaction Rankings
Farmers ranks highest among small commercial insurers with a score of 838, a 20-point improvement from 2016. Allstate ranks second with a score of 833, up 6 points from last year. Chubb and Erie Insurance rank third, in a tie, with a score of 830, up 20 points and 1 point, respectively, from 2016.
The 2017 U.S. Small Commercial Insurance Study is based on 3,312 responses from insurance decision-makers in businesses with 50 or fewer employees who purchase general liability and/or property insurance. The study was fielded from April through June 2017.
For more information about the U.S. Small Commercial Insurance Study, visit http://www.jdpower.com/resource/jd-power-us-small-business-commercial-insurance-satisfaction-study.
See the online press release at http://www.jdpower.com/pr-id/2017122.
About J.D. Power
J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. J.D. Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.
Source: J.D. PowerJ.D. Power, Satisfaction Gap, small businesses, Small Commercial Insurance Study