Insurance companies have struggled to maintain a positive imagefor customer service in light of the mainstream media's focus onisolated incidents of unpaid claims, disputes over underwritingcriteria and price-hike controversies. But as it turns out,insurers might be doing a better job than banks in keeping clientssatisfied, at least when it comes to small-business consumers.

Deloitte Research recruited 20 focus-group participants who areresponsible for managing financial services at their respectivecompanies—half representing those employing 10 or fewer, and theother half with 11-50 workers. The goal was to examine the needs,preferences and satisfaction levels of small businesses in theirfinancial-services relationships.

The participants came from a variety of industries—includingretailers, manufacturers, commercial-transportation firms andpersonal-services providers such as dry cleaners, spas, eventplanners and security agencies. The groups were very engaged duringeach animated two-hour session, with no one even stepping out touse the restroom.

One point that stood out for me, as I observed these groupsbehind a two-way mirror, was that regardless of the size of theircompanies or the type of business they were in, the participantswere fairly united in their assertions that they were getting muchbetter service from insurers than from banks.

With a few exceptions, their experiences with insurers have beensatisfactory—even very positive in a number of cases. Much of thecriticism, as well as any lack of trust expressed, often was basedon vague feelings, assumptions and stereotypes as opposed to actualnegative encounters on sales, pricing or service.

Indeed, some participants even said they are paying a littlemore in premiums than they would if they shopped aggressively andplaced their business solely according to the lowest price,explaining that the value and peace of mind provided by theircurrent carriers were worth the extra cost. The proof is in thepudding, as most of the participants in these two groups had stuckwith the same carriers for five years or more.

However, the mood of each group turned far more negative whenthe discussion shifted to how their experiences with banks comparedto their dealings with insurers. When asked why they don't simplychange banks if they are dissatisfied—as many suggested they woulddo if ever displeased with their insurer's service—most said theydidn't believe switching would make any difference because banksare all the same these days, for the most part deliveringpoor-quality service.

The focus-group participants aired a wide array of complaintsabout their banks, but the most frequently raised problem was thelack of individualized service. Many also criticized the highdegree of turnover in branch personnel, which they said makes ittough to establish and maintain personal relationships. “If you'relucky enough to find someone good, they won't last very long,”lamented one retailer in the larger employer group.

Besides observing that the number of bank service peopleavailable to them in general has dropped, many challenged thecompetence of those still on the job—particularly when it comes tocustomer service over the phone, with CSRs repeatedly described asclueless in dealing with their questions or problems.

The focus groups found the number of mergersand acquisitions among banks very frustrating, as combining twobanks into one usually meant changes in personnel—“turning ourrelationships upside down,” according to one participant. (Alimousine service attendee wryly noted that thanks to multipleM&As, she'd had as many banks as husbands, “and none of themwere any damned good.”)

More than a few said their bankers don't know much about theirbusinesses—unlike insurers, which often specialized in theirparticular industries and were thus able to provide customizedadvice and service.

Among the other common gripes raised by the focus-groupmembers:

• Banks are “killing us with fees,” said one buyer from anelectronics manufacturer.

• Lack of staff oversight or accountability for poor service.“No one seems to care about our complaints,” suggested oneretailer.

• Increasing difficulty in getting service over the phone. (“Hitthe wrong button on an electronic menu and you're gone and have tostart all over,” said a garment manufacturer.) A number ofparticipants had encountered language problems when dealing withCSRs based outside theUnited States.

• No personal relationships. (“Have people in the branch thatyou consistently know and who know what they're doing,” suggestedone retailer, when the group was asked how banking services couldbe improved.)

• Lots of account mishaps, with deposits often not registered,as well as difficulty in settling discrepancies easily andquickly.

Both groups were very skeptical about the notion of buying theirbusiness insurance through their banks, either out of concern overplacing their financial eggs in one basket or because of doubtsabout the bank's ability to provide the expertise and level ofservice required.

A number complained about their business accounts being hacked,while lamenting that banks often weren't very helpful in rectifyingthe problem. (A wireless tech retailer said a bank CSR had confidedto him that “this is happening all the time.” He noted this did notgive him confidence about the security of his company's funds,while increasing what he called the “hassle factor.”)

This is a very small sample, but I found it surprising that onlya couple of participants had any significant negative experienceswith insurers to share, while almost all aired major complaintsabout their banks.

This doesn't mean insurers can rest on their laurels. The focusgroups found the industry coming up short in a number offundamental areas: the lack of clarity in insurance policies; theneed for more transparency in claims-handling; the seemingdisconnect between their loss experience and the price they pay forinsurance; and the dearth of loss-control advice.

I'll examine these and other service challenges in my next fewblogs.