Small business insurance companies are facing a challenge: fewer customers say they’ll stick with their current insurer. A new study from J.D. Power shows that only 55% of small business clients—those with 50 or fewer employees—are certain they’ll renew their policies next year. This is a drop of six points from last year.
Rising premiums seem to be one reason for this decline. When costs go up, customers may look for better deals elsewhere. But price isn’t the only factor. About 16% of customers say good service is the main reason they stay with their insurer. This beats out price, coverage options, and company reputation.
Stephen Crewdson, managing director of global insurance intelligence at J.D. Power, pointed out that poor retention isn’t just because of higher prices. Insurers that communicate well and offer great service have a better chance of keeping customers. It’s also important for insurers to clearly explain why premiums are increasing. Satisfaction levels remain high when customers understand the reasons for price changes—even as high as those who don’t see any increase at all.
The study also found that retention dropped across nearly all groups, with Millennials showing the biggest decline, down 12 points. Overall, while competitive pricing attracts customers, a positive service experience keeps them around.
Independent agents play a key role too. Customers are happier and more likely to renew when agency staff provide excellent service, showing that retention depends on more than just the insurer or the price.
The findings highlight how crucial communication and service are in keeping small business insurance clients from shopping around. With loyalty on the decline, insurers and agents alike have work to do to improve the customer experience and explain rate changes clearly.