Small Businesses Prepared to Jeopardize Cyber Insurance
The J.D. Power 2025 U.S. Small Commercial Insurance Study has identified trust and customer service quality as the key factors contributing to customer retention in the U.S. small commercial insurance market. The study, based on responses from 2,848 small commercial insurance customers, emphasises that these factors are even more important than competitive pricing alone.
Stephen Crewdson, managing director of global insurance intelligence at J.D. Power, stated that insurers can make huge inroads toward keeping customers by communicating well and providing a higher level of service. This comes as customer satisfaction with auto insurers is declining, according to the J.D. Power 2022 U.S. Auto Insurance Study.
The study assesses insurers on seven dimensions in order of importance: trust, price for coverage, product/coverage offerings, ease of doing business, people, problem resolution, and digital channels. While price for coverage is a critical factor, since premiums have risen, customers are more willing to shop around, making communication and service quality crucial in retaining customers.
The study finds that good service experience is the most common driver of retention, beating out price, coverage options, and reputation. Understanding the reason for a premium increase is vital to customer satisfaction, and overall satisfaction is identical among customers who understand why their premium is increasing as among those whose premiums are not increasing at all.
Additional insights from the competitive landscape note the challenge smaller insurers face competing with well-known brands. However, customer retention still hinges on perceived service value and trust rather than solely brand recognition.
In the auto insurance sector, a record high number of serious collisions, skyrocketing used-vehicle prices, and surging repair costs have created an unenviable scenario for insurers. This, combined with aggressive advertising, rising premiums, and expansion of direct-to-consumer offerings, has led to auto insurance customer loyalty eroding over the last decade.
The J.D. Power 2022 U.S. Auto Insurance Study measures customer satisfaction across various dimensions. According to the study, customer satisfaction with auto insurers is lower compared to the small commercial insurance sector.
For those interested in the U.S. Small Commercial Insurance Study, more information can be found at https://www.jdpower.com/business/insurance/us-small-commercial-insurance-satisfaction-study. Similarly, more information about the J.D. Power 2022 U.S. Auto Insurance Study can be found at https://www.jdpower.com/business/insurance/us-auto-insurance-satisfaction-study.
The J.D. Power 2025 U.S. Small Commercial Insurance Study has been released, and Erie Insurance ranks highest in overall customer satisfaction with a score of 723. Cincinnati Insurance and Philadelphia Insurance each rank second in a tie with a score of 714. Retention declines significantly across demographic groups, with the largest dip being among Millennials (-12 percentage points).
Insurance, often a distress purchase or a legal requirement, lacks the feel-good factor of other purchases. However, the J.D. Power 2025 U.S. Small Commercial Insurance Study underscores the importance of insurers focusing on trust and service quality to retain customers, even in the face of rising premiums.
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