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Most small business owners in the U.S. unaware that many insurers provide commercial insurance: J.D. Power study


September 1, 2015   by Canadian Underwriter


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The majority of small business owners in the United States are not even aware than many insurers provide commercial insurance, according to the J.D. Power 2015 U.S. Small Business Commercial Insurance Study released on Monday.

Less than one-fourth of small business owners are even aware that nine of the 17 insurance providers included in the study provide insurance for business customers, and no provider has an awareness rate above 46%

The study, now in its third year, examined overall customer satisfaction and insurance shopping and purchasing behavior 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.

The study is based on 3,292 responses from insurance decision-makers in businesses with 50 or fewer employees that purchase general liability and/or property insurance.

Less than one-fourth of small business owners are even aware that nine of the 17 insurance providers included in the study provide insurance for business customers, and no provider has an awareness rate above 46%, the study found. Providers that primarily focus on personal lines have much higher awareness rates than commercially focused providers: five of the six providers with awareness rates above 40% for their commercial offerings are among the largest personal line providers, each spending more than US$300 million annually on advertising for their personal line products.

“Advertising clearly is important for providers to build awareness for their business line products,” said Mark Garrett, director of insurance industry analytics at J.D. Power, in a press release. “But advertising alone does not increase your portfolio, as small business owners need to have confidence that a personal line insurance provider can do a good job handling commercial insurance.”

That’s where commercially focused providers differ from personal line insurance providers. The study found that commercially focused insurers have much lower rates of awareness through advertising, suggesting that they develop awareness through their agents/brokers, trade groups and word of mouth from other businesses. The study also found that when awareness comes from an agent/broker or trade group, the consideration rate – the proportion of customers who considered/shopped an insurer among all of the other potential prospects – is 61%, compared with only 38% when awareness is attributed solely to advertising.

In terms of overall satisfaction, the rating was 793 on a 1,000-point scale in 2015, up 10 points from 2014. Improvements in price and policy offerings are primary drivers of the increase in overall satisfaction.

While fewer customers indicate their insurer raised their premiums in 2015 (19% vs. 25% in 2014), their overall satisfaction is higher, compared with those who had an insurer-initiated rate hike in 2014 (646 vs. 624, respectively). The increase in satisfaction is attributed in part to insurers doing a better job communicating the premium hike, as more customers indicate receiving notifications and having discussions with their insurer about available options to reduce the increase.

As well, the increase in satisfaction with policy offerings is attributed to a significant increase in the variety of coverage options and the variety of contact options available.

Other findings include:

• Communication from a provider when there is a premium change is critical to customer satisfaction. When providers fail to notify customers of a premium change, discuss option and ensure they completely understand the reason for the increase, satisfaction drops by a notable 170 points;

• Satisfaction with insurance providers among small business commercial customers affects loyalty and advocacy. Among “delighted” customers (overall satisfaction of 900 or greater), 73% say they “definitely will” renew with their current provider and 79% say they “definitely will” recommend their provider to others. Loyalty drops to 36% and advocacy to 45% among “pleased” customers (scores of 750 to 899); and

• The agent/broker is the most frequently used interaction channel among small business commercial insurance customers (53%). Satisfaction with the agent drops 162 points when the customer believes their agent doesn’t completely understand their business needs.


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