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Insurance satisfaction among small businesses reaches new high, study shows

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Most small businesses within the U.S. are increasingly satisfied with the products and services they’re receiving from commercial insurance providers, a new report indicates.

According to the J.D. Power 2023 U.S. Small Commercial Insurance Study, overall customer satisfaction reached an all-time high of 847 on a 1,000-point scale with customers noting “significant year-over-year improvement” in three of the analysis’ five focus areas.

Topics taken into account when determining customer satisfaction included billing and payment, claims, interaction, policy offerings, and price.

J.D. Power said the uptick was largely driven by businesses with between five and 50 employees.

“Contrary to what we’ve seen in personal lines insurance, small business customer satisfaction keeps rising even as premiums have continued to climb,” said Stephen Crewdson, senior director of global insurance intelligence at J.D. Power. “While the overall satisfaction numbers are high, there are some important variations based on the size of the small business… That variation should inform more targeted small business strategies on the part of insurers.”

J.D. Power noted how the improvement came despite rising interest rates and “strained” business rates. However, it added that micro-businesses with fewer than five employees felt less satisfied across all five categories. With 823 points, such businesses have lower satisfaction scores than medium-sized businesses (855 points) and larger small businesses (857 points).

The growth in commercial insurance satisfaction among medium and large small businesses is a contrast to discord happening within other sectors such as the automotive space.

Separate J.D. Power research released in June indicated that nearly one-third of auto insurance policyholders have experienced rate increases throughout the past year. The study also found that while insurance rates are rising by an average of about 15%, customer satisfaction has dropped year-over-year to its lowest level in 20 years.

Its latest commercial insurance survey indicated that good communication helped offset the cost of rising premiums for small businesses.

“When insurers proactively discuss price changes with small business customers and work with them to find ways to minimize that increase, overall customer satisfaction improves,” it said. “Among the 36% of customers who made changes to their coverage to minimize a price increase, satisfaction with the price of their policy increases 84 points. And of the 25% of customers who made changes to their business practices to reduce their risk, price satisfaction increases 135 points.”

The study noted that social media can also help insurers improve relationships with their small business policyholders. They can do so by sharing tips on reducing costs, sharing new product information, and keeping them up to date on state or federal regulation changes, the study said.

“Overall satisfaction is 88 points higher among micro business customers who follow their insurer on social media than those who do not,” it said.

According to J.D. Power, Nationwide ranked the highest in overall customer satisfaction with 883 points followed by State Farm (877) and Cincinnati Insurance (870.)

The survey, now in its 11th year, was based on responses from 2,472 small commercial insurers. Participants were polled from March through June 2023.


Main image: iStock/Andrii Dodonov

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