No longer able to compete primarily on price, insurers are now focusing their efforts on pleasing customers, with the payoff being a significant increase in satisfaction among their small business commercial customers, according to the recently released J.D. Power 2016 U.S. Small Commercial Insurance Study.
With insurance rates steadily declining for the past three years carriers are looking at other ways to differentiate themselves in a competitive market. Turning their attention to customer interactions and policy offerings has led to a 30-point improvement in overall satisfaction in 2016, to 823 on a 1,000-point scale, up from 793 in 2015.
“With few exceptions, insurers are dropping prices, so the best way for them to compete in a soft market is on customer satisfaction,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power. “Small business owners are the beneficiaries of being in an attractive market segment of insurance where satisfaction is the key differentiator.”
The study, now in its fourth year, examines overall customer satisfaction and insurance shopping and purchasing behavior among 3,396 insurance decision-makers in businesses with 50 or fewer employees that purchase general liability and/or property insurance. The study was fielded from March through May 2016. Overall satisfaction is comprised of five factors (in order of importance): interaction; policy offerings; price; billing and payment; and claims.
This marks the third consecutive year satisfaction has improved, with a 46-point increase since the study launched in 2013. Satisfaction increased across all factors in 2016, with interaction and policy offerings contributing most to the year-over-year gain. The study finds that interaction improves the most among all study factors, increasing 32 index points from 2015. Satisfaction in all three interaction subfactors improves significantly in 2016, with website performance showing the largest jump year over year (+36 points), followed by agent/broker (+34) and call center (+28).
While interaction is driving the overall increase in satisfaction, it is having the greatest impact on satisfaction of Gen Y customers. The key reasons for higher satisfaction among Gen Y customers are largely driven by interactions with their agent/broker. Not only do more Gen Y customers indicate having at least two interactions on an annual basis, compared with Gen X and Boomer customers, but they also have more in-person interactions with their agent/broker. These in-person interactions are more meaningful, the study said, as agents/brokers are nearly twice as likely to provide advice or recommend changes to Gen Y customers when compared with older cohorts.
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