NU Online News Service, March 25, 3:07 p.m. EDT

The closer a carrier's relationships with its independent agents, the more business they send its way, according to a J.D. Power and Associates satisfaction survey.

The Westlake Village, Calif.-based information services firm's findings were contained in its first "2009 Insurance Agency Satisfaction Study."

J.D. Power said for its report it surveyed 1,589 insurance agents who evaluated more than 10 companies across the industry.

Companies that were rated included American International Group, Allied, Chubb, Erie Insurance, Farmers/Foremost, Fireman's Fund, The Hartford, Liberty Mutual, Progressive and Travelers. The study was limited to auto and homeowners coverage.

According to the survey findings, the more satisfied an agent is with a carrier, the more premium the producer anticipates placing with that carrier in the future.

A carrier with an overall satisfaction rating coming close to 850 (1,000 being the highest on the satisfaction scale) found that close to 80 percent of agencies it dealt with see growth with that carrier. On the other hand, a company with a satisfaction rating close to 550 found that less than 40 percent of agencies forecast growth.

Jeremy Bowler, senior director of the insurance practice at J.D. Power, said agent satisfaction is very important because of the influence producers have over consumer-buying decisions.

"If agents are the glue that binds [consumers] to the carrier...then carriers need to do whatever they can [to improve that relationship]," Mr. Bowler said in an interview.

He pointed to an earlier consumer survey released with this report that found 60 percent of customers would renew their business through their agent. However, only 44 percent of consumers said they would definitely renew with an insurer.

An even stronger indicator of customer preference was the finding that 60 percent of customers said they would switch insurers if their agent advised them to do so.

"Companies will be hard pressed to make a loyalty play [to the policyholder] if the agent does not want to stay with the company," noted Mr. Bowler.

He said the survey revealed that satisfaction has less to do with compensation than service elements.

The key drivers of satisfaction for agents are:

o Thirty-two percent of agents say carrier contacts are the key satisfaction driver.

o Twenty-three percent say policy offerings are their key driver.

o Sixteen percent said it is claims handling.

o Thirteen percent said technology.

o Ten percent said price.

o Five percent said compensation.

The report does not reveal where carriers rank, said Mr. Bowler, because company policy does not allow such information to be divulged unless a more substantial number of companies within a market are surveyed.

J.D. Power also worked with carriers and agent associations to get the word out about the survey and its importance to the industry by attending agent meetings. This was done with the understanding that company names would not be revealed because "no one wanted to shoot themselves in the foot by coming in last," Mr. Bowler noted.

He said they worked with companies and associations because past attempts through mailings and phone calls to do the survey were unsuccessful. Getting the word out through the meetings legitimized the process for agents, he said.

From these meetings, agents also understood that companies would take the results seriously and work to correct or improve their relationship.

"This survey is going to be heard by the executive suite," Mr. Bowler said, adding that he knows the findings have already been discussed by the boards of two national companies.

He said J.D. Power is considering similar reports in the future to examine other lines of business including satisfaction with small and midsize commercial lines accounts.

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J.D. Power Survey: Good Agent Relations Make Insurers Money

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