Survey: Small Business Customers Depend on Agents’ Expertise

Agent expertise in workers’ compensation insurance is a critical factor in small businesses’ choice of carriers, according to a recent national survey conducted by Employers, which specializes in insurance for small businesses. The survey targeted small businesses throughout the nation. We found that nearly seven out of 10 small business owners, partners, presidents and CEOs depend upon their insurance agents to explain workers’ compensation coverage and pricing.

The expertise and recommendations of a trusted agent remain of critical importance to small business decision makers when they are faced with choosing a workers’ compensation insurance carrier, according to survey results.

Although increasing numbers of small business decision-makers are using the Internet, our survey results indicate they are three times more likely to go to their workers’ compensation insurance agents than to search on-line for workers’ compensation information.

Another critical survey finding is decision makers’ need for workers’ compensation insurance education. Our survey respondents reported that they spend money on workers’ compensation insurance coverage without fully understanding how it works, what they get for their premium payments, why they continue coverage with a particular carrier, or how coverage can protect their small business’s bottom line from the impact of serious claims.

A related survey result indicated that 18 percent of small business owners who reported having selected a new carrier within the last policy renewal period were unable to recall the provider they switched to.

An agent-initiated education process may also build stronger loyalty between small businesses and their agencies. Our survey found that the majority of small business respondents were highly satisfied with their workers’ compensation insurance agents (71 percent). However, less than half of our survey respondents who had at least one claim in the past two years reported being satisfied with their agents.

Agents who educate themselves and then help to educate small business customers about workers’ compensation may, as a result, be perceived as “experts.” They also can add value to their client relationships by calling attention to the need for safety programs to help prevent workplace injuries and illnesses. These educated agents are also prepared to help small business customers effectively manage claims that may arise from workplace injuries and illnesses.

We found that price and financial strength remain deciding factors in choice of carrier. Price was the primary motivator for 75 percent of decision-makers in our survey, and 69 percent ranked their carrier’s financial strength as a secondary factor.

The majority of small business respondents (60 percent) rated claims management as important to their choice of workers’ compensation insurance carrier. Our survey results indicate that while decision makers may not fully understand their policies, they appear to value agents and carriers poised to help with claims, and which have programs in place to help get valued employees back to work as soon as they are able.

Small business owners, partners, presidents, and CEOs confront distinct operational challenges daily. Agents can work to lighten the load on these small business decision makers by doing their workers’ compensation insurance homework and delivering expert information and recommendations.

The survey by Employers identifies a clear opportunity for agents across the industry marketplace. Agents who take the time and responsibility to become educated in workers’ compensation coverage, claims and related services can pass their expertise along to their small business customers. The result can be both stronger customer loyalty and an expanded customer base.

First quarter 2008 results of the Small Business Market Monitoring Program were released by Employers in collaboration with Profile Marketing Research Inc. of Lake Worth, Fla. Data was collected through telephone interviews during the period December 2007 through February 2008 from a nationally representative sample of 400 small business decision-makers at companies with 5-99 employees. Overall survey results have a +/- 4.89 percent margin of error.

The Small Business Market Monitoring Program is a semiannual survey measurement of workers’ compensation insurance industry trends, conducted by Employers. Additional information and additional survey results are available by visiting www.employers.com. Findings from the next national survey period are scheduled to be released by Employers in the third quarter of this year.

Topics Trends Carriers Agencies Commercial Lines Workers' Compensation Business Insurance