Is Your Small Business Happy With Your Commercial Insurance?

The U.S. Small Commercial Insurance Study 2017 conducted by J.D. Power (based on over 3,000 insurance decision-makers in businesses with 50 or less employees, with general liability and/or property insurance) reviewed overall customer satisfaction amongst small business commercial insurance customers that employ up to 50 individuals.

Overall satisfaction is measured according to five elements (these factors are positioned in order of importance) including: interaction, policy offerings, price, billing and payment, as well as claims (note that satisfaction is calculated on a 1,000-point scale).

In the wake of the devastation of Hurricane Harvey, it is timely to revisit the importance and impact of commercial insurance on small businesses.  Hurricane Katrina in 2005 caused $79.7 billion in damages. In 2012, Hurricane Sandy caused $36.1 billion, and Hurricane Ike, which in 2008 followed a similar path as Harvey, caused $22.3 billion in damages.

“Commercial insurance is one of the least understood and oft neglected small business expenses,” explains Abraham Zaiderman, founder of Abraham Zaiderman Consulting, a company specializing in advising restaurant franchisees, “however, when there is an event requiring insurance, it can mean the difference between continuing as a going concern or closing your doors forever.”

At National Business Helpers, we have worked with our clients during several serious storms — helping to secure an immediate business cash advance or alternative financing when banks or traditional lenders would have taken weeks or months.

• Overall customer satisfaction in the small commercial insurance market has increased by two index points in 2017 to an all-time high of 825. Satisfaction improves 13 index points among larger businesses (11-50 employees), but declines 18 points among smaller businesses (five-10 employees) and remains steady among the smallest businesses (fewer than five employees).
• Service interactions, which are the most significant driver of overall customer satisfaction, saw the sharpest declines this year, driven by customer dissatisfaction with agent/broker interactions. Conversely, the claims factor has the greatest year-over-year improvement in satisfaction.
• Multi-channel approach to servicing is key to small business market: The preferred service interaction channels for small business insurance customers are split relatively evenly between agent in-person/phone (61%) and website (57%). These are followed by agent e-mail/text (39%); customer service e-mail/text (27%); customer service phone (26%); and mobile app (9%).
• Demand for self-service grows and outpaces actual usage: The preference for self-service has grown by 28% since 2015 (61% in 2017 vs. 48% in 2015), and continues to outpace actual usage (43%) by a significant margin. Notably, micro businesses have the greatest disparity between preference and usage; their preference for self-service is nearly twice the rate of their actual usage (60% vs. 36%, respectively).

Farmers ranks highest among small commercial insurers with a score of 838, a 20-point improvement from 2016. Allstate ranks second with a score of 833, up 6 points from last year. Chubb and Erie Insurance rank third, in a tie, with a score of 830, up 20 points and 1 point, respectively, from 2016.