The softening commercial insurance market has some definite downsides for agents: lower commissions, slowed organic revenue growth and tougher peer competition among them. Yet even in an era of declining rates, there is some positive news for the channel.
According to new research from J.D. Power, the decreased ability of carriers to compete on price has set the stage for greater importance on customer service – an area in which agents excel. In fact, survey respondents to the group’s 2016 US Small Commercial Insurance Study are more satisfied with their agent than ever before. Positive ratings for the sector soared in the past year, gaining 34 percentage points on a 1,000-point scale since 2015.
The study, now in its fourth year, measures overall customer satisfaction and insurance shopping and purchasing behavior among small business owners with 50 or fewer employees. Satisfaction is determined by rankings in five factors: interaction, policy offerings, price, billing and payment, and claims.
The news may not surprise some agents, who take their role in the “interaction” function seriously, but the group from whom they received the highest ratings may raise some eyebrows.
Greater interaction with an agent was found to be most valued by younger business owners – those considered among Generation Y, or the millennial generation. Satisfaction among Gen Y consumers improved 51 points, the largest rise among generational groups, to 851 this year. Overall satisfaction among Boomers clocked in at 820 points, followed by Gen X at 812 and Pre-Boomers at 809.
It is the only J.D. Power insurance study in which Gen Y is the most satisfied generation, noted Greg Hoeg, J.D. Power vice president of US insurance operations.
“For young entrepreneurs, their business defines who they are, and they want to protect it,” Hoeg said. “Gen Y’s satisfaction with their insurance provider also reflects their social consciousness – they care about their business and their employees.”
This should serve as a message to agents on how to interact with younger commercial customers. While many independents dismiss millennials as more likely to abandon the channel for tech-enabled competitors, they are actually the most engaged and appreciative of their agent.
Not only do more Gen Y customers indicate having at least two interactions with their agent on an annual basis, compared with Gen Xers and Boomers, but they also have more in-person interactions with him or her. These in-person engagements were rated as more meaningful, and agents were found to be nearly twice as likely to provide advice or recommend changes to Gen Y customers when compared with older business owners.
Giving more focus to this younger cohort may also prove lucrative for agents. While they have been operating their businesses for a much shorter time, they typically have higher revenues than the businesses of their Boomer counterparts. In fact, 51% of Gen Y business customers report annual revenue of more than $500,000, compared with 42% of Boomers.
To more fully serve Gen Y business owners, agents may be interested in the small commercial insurance customer satisfaction rankings given to carriers by J.D. Power. Based on survey responses, the 2016 study found American Family ranks highest among small commercial insurers, with a score of 839 – a 73-point improvement from 2015. American Family scored particularly well in the policy offerings and billing and payment factors.
Allied and
Nationwide rank second in a tie with a score of 835.
Others in the top rankings, where the industry average fell at 823, include:
State Farm (831), Erie Insurance (829),
Allstate (827) and Auto-Owners Insurance (826).
Overall Customer Satisfaction Index Scores
(Based on a 1,000-point scale) |
For Consumers |
| |
|
| American Family |
839 |
5 |
| Allied |
835 |
5 |
| Nationwide |
835 |
5 |
| State Farm |
831 |
4 |
| Erie Insurance |
829 |
4 |
| Allstate |
827 |
3 |
| Auto-Owners Insurance |
826 |
3 |
| Industry Average |
823 |
3 |
| Liberty Mutual |
821 |
3 |
| Zurich |
821 |
3 |
| Farmers |
818 |
3 |
| AIG |
816 |
3 |
| The Hartford |
814 |
3 |
| Chubb |
810 |
2 |
| CNA Insurance |
806 |
2 |
| Travelers |
793 |
2 |
Power Circle Ratings Legend
5 – Among the best
4 – Better than most
3 – About average
2 – The rest
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Agent/broker sector tanks to 5-year low on “muddling economy”: Report
Commercial insurance customers rate broker performance: JD Power
