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Why Larger Agencies Should Pursue Small Commercial Lines


Author: Philip Charles-Pierre

Does this scenario feel familiar? There’s a large insurance agency in the region. Everyone knows its stellar reputation. Because of its brand, a neighborhood hair salon approaches one of the agency’s producers for help with insurance coverage. The premium isn’t likely to be big. The team might have to spend hours visiting multiple carrier websites to get quotes.

Based on analysis of the anticipated commission, the producer determines that their time would be better spent pursuing the larger companies with more complex risk and larger commissions. They advise the salon to go to a smaller agency.

This is a common situation for many larger insurance agencies that have found that servicing small business takes a lot of time and effort for low reward in terms of premiums and commissions. However, this is changing—driven in part by technology and market conditions—leading to new opportunities for large agencies.

Small business insurance has been traditionally defined by its premium size, often viewed as anything under $25,000 in annual premiums. But technology is beginning to blur the lines, creating efficiencies that enable more agencies to consider writing insurance for smaller businesses.

Today, it is less about the premium size and more about being able to get a quote via a carrier’s portal without significant direct interaction from an underwriter. When you have seamless processing from lead to quote to binding a policy, it removes many of the barriers to writing small commercial, and agencies can begin to think about the market in terms of quantity by targeting more small businesses and even specializing in certain areas.

Quoting, rating and binding small commercial policies is more efficient. Carriers have made it easier to quote a wider range of businesses via online portals, a convenient feature as small businesses tend to be more varied and specialized. New solutions providers have emerged to improve the speed and efficiency of quoting. Agents can collect information from customers, submit to multiple carriers at once eliminating the need to rekey data, and compare different coverage options side by side.

Here are three reasons why large agencies should grow their small commercial books:

1) There’s room in the market. Unlike personal lines, no InsurTech has cornered the market and many operate as digital lead generators, ultimately handing off leads to an agent to complete. For larger agencies that have built trust across other lines, there is opportunity for them to compete in this space.

2) Agency and carrier partnerships can create solutions for businesses. With over 30 million small businesses in the U.S., small businesses present a great opportunity for carrier partners. Working with carriers to go beyond traditional coverage options and develop out-of-the-box solutions for more specialized industries can open up new avenues.

For example, agencies can work with a carrier to develop a program for a particular specialized sector, such as food trucks, mobile pet grooming or cannabis dispensaries. Marketing a new program on a mass scale enabling quick and seamless quoting of new business with low front end costs is a winning strategy.

3) Building relationships now leads to long-term opportunity. Most small businesses don’t begin with the intention of remaining small forever. They hope to grow into larger companies. Forming relationships with them from the beginning cements the agency as a long-term business partner who will be there to help with all of their needs as they expand.

Shifting Your Strategy to Focus on Small Business

The opportunity is real, but many large agencies will have to overcome certain challenges as they adjust their strategies to pursue small commercial.

First, agencies may need to restructure organizational resources, assigning people to manage and run the small commercial business including customer service representatives and a marketing team. They will also likely need to ensure they have the technical infrastructure and processes in place to make servicing customers as smooth as possible.

The right digital tools are vital to ensure small business commercial becomes a profitable offering. To engage customers, the agency website should have a dedicated and informative section for small businesses and include the latest digital features, such as a chatbot to answer routine questions.

The agency should also utilize tools that efficiently gather the right information directly from the prospects. This can be transferred into a quoting solution and submitted to multiple carriers at once.

It’s also important to work closely with carriers in building out the commercial practice. Carriers are continuing to invest in making the breadth of online small business commercial easier. They are adding more business classes and more complicated risks. Regularly check in with carriers to see what they are offering. A partner might have added new capabilities which will help serve customers more efficiently.

The time is now to get into small business commercial. While many larger agencies may have been reluctant to add small commercial due to the barriers in the past, the right tools, structure and team can ensure growth for the agency and more risk management solutions for complex small businesses.

Originally posted on IA Magazine