J.D. Power survey: Insurers competing more on customer satisfaction
No longer able to compete primarily on price, insurance providers are now focusing their efforts on ways to please their customers, with the payoff being a significant increase in satisfaction among their small business commercial customers, according to the J.D. Power 2016 U.S. Small Commercial Insurance Study released today.
Three consecutive years of steadily declining insurance rates have carriers 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. This marks the third consecutive year satisfaction has improved, with a 46-point increase since the study launched in 2013.
“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 2016 U.S. Small Commercial Insurance Study is based on 3,396 responses from insurance decision-makers in businesses with 50 or fewer employees that purchase general liability or property insurance. The study was fielded from March through May 2016.
The study, now in its fourth year, examines overall customer satisfaction and insurance shopping and purchasing behavior among commercial insurance customers with 50 or fewer employees. Overall satisfaction is based on five factors (in order of importance): interaction, policy offerings, price, billing and payment, and claims.
While interaction is driving the overall increase in satisfaction, it is having the greatest impact on satisfaction of Gen Y customers — those born between 1977 and 1994. The key reasons for higher satisfaction among Gen Y customers are largely driven by interactions with their agent/broker, the study found. Not only do more Gen Y customers indicate having at least two interactions on an annual basis, but they also have more in-person interactions with their agent/broker than do Gen X and boomer customers.
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