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Special Report: The Insurance Disconnect

Posted By Administration, Tuesday, August 15, 2017

J.D. Power’s 2017 U.S. Small Commercial Insurance Study is out. It looks at the satisfaction rating of insurers by micro-small businesses (fewer than five employees), small-size businesses (five to 10 employees) and larger-size small businesses (11 to 50 employees).

 

It’s the fifth year for the study and it grades customer satisfaction with commercial insurers on a 1,000-point scale in these areas (listed in order of importance):

  Interaction

  Policy offerings

  Price

  Billing and payment

  Claims

 

This year things are better between insurers and the large-size small businesses but have grown worse for both of the smaller-sized groups. Greg Hoeg of J.D. Power said what’s sad is small business has been an area of growth for P&C insurance during this soft market.

“Our data shows that the small commercial market is still ripe for competition. While looking at the small business market in aggregate shows relatively steady levels of customer satisfaction year over year, the serious gap between very small businesses and larger small businesses could present an opportunity for those carriers that get the small business formula just right,” he said.

 

Here are some findings from the survey:

  Overall satisfaction from these customers with insurance has risen two points to an all-time average high of 825

  For larger small-businesses the increase is 13 points

  Satisfaction fell by 18 points among smaller businesses with five to 10 employees

  It remained steady for the very smallest micro-businesses who have fewer than five employees

  Service is very important to small business and it saw the sharpest decline from interaction with agents and brokers

  Claims satisfaction saw the most improvement between this year and last

 

Small businesses want a multi-channel communications approach:

  61% want agent in-person or phone call communication

  57% prefer to go through a website

  39% like agent email or texting

  27% want the customer service to email or text

  26% want customer service to phone

  9% prefer using a mobile app

 

The survey also looked at self-service and its demand. People want it but the demand for self-service is outpacing actual use:

  The preference for self-service has grown to 61%

  It’s up by 28% since 2015 when the preference was 48%

  Actual use — however — is 43%

  Micro businesses use it less than others with a 60% preference rate and a 36% usage rate

 

Colleen Cairns is a senior analyst at J.D. Power. She said, “There is a notable opportunity for insurers of companies in the very small business segment, which are clearly not being serviced at the same level as their slightly larger counterparts. The key to effective growth in that slice of the market is a focus on strong agent interactions and smart use of digital and self-service tools designed for the unique needs of businesses where the target customer is often the time-pressed owner of the business.”

Here are the rankings based on 3,312 responses from insurance decision-makers with 50 or fewer employees. Here are the ratings:

  5 is the best

  4 is better than most

  3 is about average

  2 is the rest

 

                                                    Overall Score  Ranking 

 

1. Farmers                                         838                 5

2. Allstate                                          833                 4

3. Chubb                                           830                 4

4. Erie Insurance                             830                 4

5. AIG                                                 828                 3

6. State Farm                                    827                 3

7. Auto-Owners Insurance             826                 3

 

Industry Average                              825

 

8. Zurich                                            820                 3

9. American Family                         819                 3

10. Liberty Mutual                            817                 2

11. The Hartford                               814                 2

12. Nationwide                                 813                 2

13. Travelers                                     813                 2

14. CNA                                             807                 2

 

Insurance and its relationship to customers is a hot button for Brett Kelly. He’s a trainer, coach and partner with the John Maxwell Team. He recently penned an article on how your customers may like you, and how they make like your agency and how they may like the latest funny insurance commercial.

But what they don’t like — he says — is insurance.

“When I attended my very first insurance training course back in 2000, the instructor said something to us I will never forget. He said, ‘Congratulations, you get to sell a product that nobody likes, understands, thinks it is too expensive, and only use when something bad happens.’ Talk about a kick in the pants for a young guy getting ready to take on the world.”

After years in the business Kelly says he’s found truth in what the instructor said. “Most people I talk to about insurance don’t like it, don’t really understand it, always tell me it’s too expensive and only get to use when they suffer a financial loss,” he wrote.

That thought led him to pen an article for National Underwriter on why people don’t like insurance and what insurance can do to change that perception.

 

Here’s why they don’t like insurance:

1. It’s a product that’s not tangible. Most things we buy can be seen, felt, touched and used. All you get with insurance is a policy. Kelly said some agents are kind of creative and you might also get a cup or some other trinket thrown in.

2. Insurance is complicated. In most policies definitions, terms, exclusions and other provisions number around 100. It’s sleepy reading. A good agent — however — can explain it all in layman’s terms but they don’t and that leads to the third reason people don’t like insurance.

3. They don’t trust the insurance agent or insurance company. Kelly says too many people think insurers and insurance agent are out to get them and get into their pocketbooks. Some of that is justified because of bad experiences range from not being treated fairly on a claim to not getting good service from an agent.

“I see the critical importance of insurance products and have seen property, assets, and lives put back together after catastrophic events. Also, I have met hundreds of other agents, company representatives and claims adjusters. The large majority of them are good hard-working people who want to help and do what’s best for their clients. It’s always the small minority that ruin the reputation and credibility of an industry,” Kelly wrote.

 

At that point, he says it is important to remember why people buy insurance:

He starts with Maslow’s hierarchy of needs. It deals with safety and survival issues and safety and survival is why most people buy insurance. Those buying insurance are protecting their work, reputation and what they’ve worked hard to build or purchase. They want proof they can move past a disaster somewhat whole.

Kelly’s conclusion: “Most buyers simply don’t care how shiny your brochure is or how long you have been in business. Insurance customers care that you understand their concerns and that you'll will be there if they need you.”

If you want more info on Kelly here are two contact links: www.brentmkelly.com or email him at brent@bizzgrizz.com.  

 

Source links: Insurance Journal, PropertyCasualty360.com

Tags:  Insurance Content  Insurance Industry  Insurance News  Special Report: The Insurance Disconnect  Weekly Industry News 

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