Do Small-Business Buyers Like Insurers More Than Banks?

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

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

The participants came from a variety of industries—including retailers, manufacturers, commercial-transportation firms and personal-services providers such as dry cleaners, spas, event planners and security agencies. The groups were very engaged during each animated two-hour session, with no one even stepping out to use the restroom.

One point that stood out for me, as I observed these groups behind a two-way mirror, was that regardless of the size of their companies or the type of business they were in, the participants were fairly united in their assertions that they were getting much better service from insurers than from banks.

With a few exceptions, their experiences with insurers have been satisfactory—even very positive in a number of cases. Much of the criticism, as well as any lack of trust expressed, often was based on vague feelings, assumptions and stereotypes as opposed to actual negative encounters on sales, pricing or service.

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

However, the mood of each group turned far more negative when the discussion shifted to how their experiences with banks compared to their dealings with insurers. When asked why they don't simply change banks if they are dissatisfied—as many suggested they would do if ever displeased with their insurer's service—most said they didn't believe switching would make any difference because banks are all the same these days, for the most part delivering poor-quality service.

The focus-group participants aired a wide array of complaints about their banks, but the most frequently raised problem was the lack of individualized service. Many also criticized the high degree of turnover in branch personnel, which they said makes it tough to establish and maintain personal relationships. “If you're lucky 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 people available to them in general has dropped, many challenged the competence of those still on the job—particularly when it comes to customer service over the phone, with CSRs repeatedly described as clueless in dealing with their questions or problems.

The focus groups found the number of mergers and acquisitions among banks very frustrating, as combining two banks into one usually meant changes in personnel—“turning our relationships upside down,” according to one participant. (A limousine service attendee wryly noted that thanks to multiple M&As, she'd had as many banks as husbands, “and none of them were any damned good.”)

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

Among the other common gripes raised by the focus-group members:

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

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

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

• No personal relationships. (“Have people in the branch that you consistently know and who know what they're doing,” suggested one retailer, when the group was asked how banking services could be improved.)

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

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

A number complained about their business accounts being hacked, while lamenting that banks often weren't very helpful in rectifying the problem. (A wireless tech retailer said a bank CSR had confided to him that “this is happening all the time.” He noted this did not give 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 only a couple of participants had any significant negative experiences with insurers to share, while almost all aired major complaints about their banks.

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

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