Best Insurers for Small Businesses

survey on computer screen
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Which commercial insurers are meeting the needs of small business owners? To answer that question, J.D. Power conducted a satisfaction survey in 2016. The results showed that some insurers are doing a better job of satisfying of small businesses than others.

Competitive Market

The insurance market for small businesses is very competitive. Many insurers sell insurance designed for small companies. However, the insurance market is very soft, so insurers are unable to compete on price.

Many insurers have tried to distinguish themselves by retooling their product offerings and improving customer service. 

According to J.D. Power, insurers have spent considerable time and effort creating new distribution channels. They have also tried to make their systems more efficient for agents. J.D. Power's satisfaction survey can help insurers measure the outcome of their investment. It can also help insurers gauge their strengths and weaknesses compared to their competitors.

Purpose of the Survey

The survey was designed to assess the satisfaction of small business owners with their insurers. J.D. Power wanted to know what services business owners wanted, needed and expected from their insurers. It also wanted to identify trends in the small commercial insurance industry.

All survey participants were businesses with fifty or fewer employees. Business owners were asked to rate their insurers based on the following six factors:

  • Overall Satisfaction Overall satisfaction with every aspect of the services provided by their insurer
  • Policy Offerings Satisfaction with the variety of coverages their insurer offered and whether those coverages met their needs
  • Price Satisfaction with the price charged for the coverages offered (value)
  • Billing and Payment Satisfaction with insurer's billing and payment process. Were billing statements clear, accurate, and produced in a timely manner?
  • Interaction Satisfaction with insurer's communication, whether through an agent, a call center representative or the insurer's website
  • Claims Satisfaction with claims process, including the insurer's procedures, adjusters, and claim settlements

Power Circles

J.D. Power tabulated the responses from survey participants. It then rated insurers on each of the six factors utilizing its Power Circle Ratings system. The system is a proprietary product of J.D. Power. It is designed to provide unbiased feedback from users of a product or service.

For each of the six survey items, J.D. Power assigned insurers a rating of two, three, four or five Power Circles. Insurers that provided greater satisfaction earned more circles. Here's what the numbers mean:

5 Power Circles - Among the best

4 Power Circles - Better than most

3 Power Circles - About average

2 Power Circles - The rest (below average)

In addition to power circles, J.D. Power assigned each insurer a numeric score based on a 1,000-point scale. This score reflects customers' overall satisfaction with the insurer.

The scores ranged from 839 to 793, with an average of 823.

Survey Results

The following chart shows how the insurers fared in the survey. Note that the numbers 2, 3, 4 and 5 indicate the number of Power Circles assigned to the insurers. Two insurers (Cincinnati Insurance and Philadelphia Insurance) were included in the survey but omitted from the ranking due to small sample sizes.

InsurerScoreOverall Satis.Policy OfferingsPriceBilling & PaymentsInteractionClaims
American Family83955454-
Allied83553535 -
Nationwide83554345 4
State Farm83145353 4
Erie82944343 5
Allstate82733432 3
Auto-Owners82634335 2
Liberty Mutual821333324
AIG81633233 -
Chubb81023222 -
CNA80622233 -

The survey winner was American Family, a mutual insurer based in Madison, Wisconsin.

American Family sells personal and commercial coverages through captive agents. It provides business insurance to small trade contractors, retail shops, professional offices, auto repair shops, restaurants, and apartment owners. Allied earned second place, followed by Nationwide, State Farm, and Erie. Like American Family, Nationwide and State Farm distribute their products through captive agents.

This was J.D. Power's fourth consecutive satisfaction survey of small businesses. The surveys have shown an improvement in customer satisfaction over the last three years. Between 2013 and 2016, the overall satisfaction score increased by 46 points. The 823-average satisfaction score in 2016 was 30 points higher than the 793 score in 2015.

Gen Y Wants Customer Interaction

The 2016 study revealed generational differences between customers. It showed that Generation Y customers want more interaction with agents and brokers than either Baby Boomers or Generation X customers. Insurers, and the agents that represent them, must keep this in mind when dealing with Gen Y-ers. Younger customers want to connect with their agent two or more times each year. Gen Y-ers also prefer more in-person interaction than their older counterparts.