Advertising Helps, But Small Business Owners Still Have Low Awareness Of Commercial Insurers

Erie Insurance Ranks Highest in Small Business Commercial Insurance Customer Satisfaction for a Third Consecutive Year

Westlake Village, CA  /PRNewswire/ - Insurers trying to attract new small-business customers face one major hurdle: many small business owners are not aware many providers even provide commercial insurance, according to the J.D. Power 2015 U.S. Small Business Commercial Insurance StudySMreleased today.

The study, now in its third year, examines overall customer satisfaction and insurance shopping and purchasing behavior among small-business commercial insurance customers with 50 or fewer employees. Overall satisfaction is comprised of five factors (in order of importance): interaction; policy offerings; price; billing and payment; and claims.

For more information on the study, visit http://www.jdpower.com/resource/jd-power-2013-us-small-business-commercial-insurance-satisfaction-study.

Less than one-fourth of small-business owners are even aware that nine of the 17 insurance providers included in the study provide insurance for business customers, and no provider has an awareness rate above 46 percent.¹ Providers that primarily focus on personal lines of insurance have much higher awareness rates than commercially focused providers. Five of the six providers with awareness rates above 40 percent for their commercial offerings are among the largest personal line providers, each spending more than $300 million annually on advertising for their personal line products.²

"Advertising clearly is important for providers to build awareness for their business line products," said Mark Garrett, director of insurance industry analytics at J.D. Power. "But advertising alone does not increase your portfolio, as small business owners need to have confidence that a personal line insurance provider can do a good job handling commercial insurance."

That's where commercially focused providers differ from personal line insurance providers. The study finds that commercially focused insurers have much lower rates of awareness through advertising, suggesting they develop awareness through their agents/brokers, trade groups and word of mouth from other businesses. The study finds that when awareness comes from an agent/broker or trade group, the consideration rate—the proportion of customers who considered/shopped an insurer among all of the other potential prospects—is 61 percent, compared with only 38 percent when awareness is attributed solely to advertising.

Overall Satisfaction 
Overall satisfaction among small business customers is 793 on a 1,000-point scale in 2015, up 10 points from 2014. Improvements in price and policy offerings are primary drivers of the increase in overall satisfaction.

While fewer customers indicate their insurer raised their premiums in 2015 (19% vs. 25% in 2014), their overall satisfaction is higher, compared with those who had an insurer-initiated rate hike in 2014 (646 vs. 624, respectively). The increase in satisfaction is attributed in part to insurers doing a better job communicating the premium hike, as more customers indicate receiving notifications and having discussions with their insurer about available options to reduce the increase.