The Smaller the Small Business, the Bigger the Insurance Discontent: J.D. Power

Not all small businesses are the same when it comes to customer satisfaction with commercial insurance. There are widening satisfaction gaps among small businesses of different sizes, according to the J.D. Power 2017 U.S. Small Commercial Insurance Study. The study found 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. While there has been year-over-year improvement in overall satisfaction among customers in the larger-size group, there have been declines in satisfaction 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. “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.

These are some of the study’s findings:

• Overall satisfaction scores belie discontent: Overall customer satisfaction in small commercial insurance increased two index points in 2017 to a 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 saw the sharpest declines this year, driven by customer dissatisfaction with agent/broker interactions. The claims factor has the most 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 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 for self-service grows and outpaces actual usage: Preference for self-service has grown by 28% since 2015 (61% in 2017 vs. 48% in 2015), and continues to outpace actual usage (43%). Micro businesses have the greatest disparity between preference and usage; their preference for self-service is nearly twice the rate of 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.

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