Commercial-focused insurance providers missing ‘personal touch’ when selling to small businesses

Most insurance decision-makers at small businesses responding to a recent survey, who bought coverage from “personal lines-focused” insurers, said they met with their agent in person, market research firm J.D. Power suggested.

J.D. Power, a unit of New York City-based McGraw Hill Financial Inc., released Monday its second annual 2014 U.S. Small Business Commercial Insurance Study.

“Nearly two-thirds (63%) of customers of personal lines-focused insurers indicate they met with their agent in person, compared with 53% of those insured with a more commercial insurer,” J.D. Power said in a release. “Additionally, 32% of customers of more commercial providers and 24% of customers of predominantly personal lines insurers have not had any interaction through any channel with their insurer during the last 12 months.”

The study, which was fielded from April through June 2014, is based on 3,525 responses from insurance decision-makers, in businesses with 50 or fewer employees, that purchase general liability and/or property insurance. The study examined overall customer satisfaction, insurance shopping and purchasing among respondents.

“Overall satisfaction is comprised of five factors (in order of importance): interaction; policy offerings; price; billing and payment; and claims,” J.D. Power noted.

The study found that 41% of customers of “predominantly personal lines insurers first had their personal insurance with the insurer and added their commercial lines later,” J.D. Power noted. “This occurs much less frequently among customers of more commercial insurers (12%).”

Small business owners “often purchase commercial insurance from the same agent that provides their home and auto insurance,” Jeremy Bowler, senior director of the insurance practice at J.D. Power said in a release.

Respondents rated their overall satisfaction with insurers on a 1,000-point scale.

Overall satisfaction among small business customers is 783 on a 1,000-point scale in 2014, up 6 points from 2013,” J.D. Power noted.

Insurance carriers “that write the majority of their business in personal lines of insurance” had an “average overall satisfaction score of 804.” Insurers that focus “more broadly on writing commercial insurance” had an overall satisfaction score of 766.

“All insurers benefit from providing a highly satisfying customer experience with increased customer loyalty and advocacy,” J.D. Power stated. “Among ‘delighted’ customers (overall satisfaction scores of 900 or higher) of personal lines-focused insurers, 79% say they ‘definitely will’ renew their policy with their current provider, and 81 percent say they ‘definitely will’ recommend their provider to family and friends. Among ‘delighted’ customers of primarily commercial providers, 70% indicate they intend to renew and 72% provide recommendations.”

The study also found that respondents buying from predominantly commercial insurers who were considered as ‘delighted’ customers purchase 1.5 additional products and pay more than US$2,000 in annual premiums, compared to ‘dissatisfied’ customers, or those whose overall satisfaction scores were 549 or lower.