Are property/casualty insurers facing a potential retention problem with small business customers?
According to the J.D. Power 2025 U.S. Small Commercial Insurance Study, just 55% of customers say
they “definitely will” renew with their current insurer, down six percentage points from a year ago.
The downturn in customer loyalty comes as premiums have been rising and that could explain why some c
ustomer indicate they may jump ship. But it’s not all about premiu
) of customers point to a positive service experience as a reason for sticking with their current insurer — a
nd that’s a stronger influence than price, coverage o
ptions, or reputation.
“Interestingly, the drop in retention is not solely attributable to highe
r premiums,” says Stephen Crewdson, managing director of global ins
urance intelligence at J.D. Power. “In fact, insurers that communicate wel
and provide a higher level of service can make huge inroads toward keeping customers.”
According to Crewsdon, satisfaction is at an identical level among customers who understand why their premium
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is increasing as it is among those whose premiums are not inc
reasing at all, which he believes “puts a huge onus on insurers to bolster their outreach around rate increases.”
The J.D. Power survey measures overall customer satisfaction among small commercial insurance customers
with 50 or fewer employees. It rates insurers on trust; price for coverage; product/coverage offerings; ease of doi
ng business; people; problem resolution; and digital channels.
Following are some key findings of the 2025 study:
Retention declines across the board: After several years of improvement and stability, intended retention has dropped significantly among customers acros
s virtually all demographic groups. The largest dip is among Millennials1 (-12 percentage points).
Service sets tone for
retention: Competitive pricing is a key reason customers select and stay with an insurer, but service is
just as important in retaining them. Overall, 16% of customers say good s
ervice experience is the most common driver of retention, beating out price, coverage options and reputation.
Communication about rate increases is vital to satisfaction: Overall satisfaction, which is 722 (on a 1,000-point scale) among customers who say they completely
understand why their premiums increased, is identical to that among customers who have no increase at all. T
he number of customers who say they completely understand the reason for their rate increase has dropped by 5 percentage points since 2024.
Institutional knowledge, website resolution are key retention drivers: Insurers’ ability to demonstrate that they fully understand a customer’s busine
ss or industry drives a 37-percentage-point improvement year over year in customer intent to renew, followed by customers’ understanding of their policy (+33 points); understanding the reason for a premi
um increase (+26); and the ability to resolve a problem entirely on an insurer’s website (+23).