Small-business entrepreneurs say they are ready to purchase their insurance online, direct from carriers, according to a recent survey.

Fifty-one percent of 751 business owners responding to Deloitte's “Voice of the Small-Business Consumer” say they would be either very or somewhat likely to purchase insurance direct from carriers over the web. Of the 51 percent, 16 percent were “very likely.” Meanwhile, 49 percent say they are not very likely.

Those ranging in age from 26 to 34 gave the strongest indication they would purchase coverage online if it was available, with 62 percent saying they would be somewhat or very likely to do so (22 percent “very likely”) and 38 percent saying they are not very likely to do so.

Entrepreneurs running companies with less than $100,000 in annual revenue are most open to purchasing online—66 percent. That figure drops considerably as company revenues rise. In companies with revenues of $5 million to less than $20 million, just 43 percent say they would purchase online direct.

Deloitte notes that the higher the revenue the more complicated the risk profile, meaning there is more to lose if the buyer gets the coverage wrong. That fear is at least one positive that agents and brokers can take away from the survey, which otherwise makes a case for carriers to build their online small commercial business offerings.

The vast majority—84 percent—who would purchase online say they believe the advantage to buying direct would be getting a cheaper price. The discount would not have to be much to lure customers, according to the survey. Twenty-three percent say they expect a discount of 10 percent or less and 36 percent say they expect a discount between 11 to 15 percent.

Those with experience buying personal-lines insurance online were most likely to buy commercial insurance online.

That number dropped to less than 13 percent for those who had never purchased personal lines online.

By line of business, respondents were most likely to purchase general liability and property online.

Buyers of workers' compensation and professional liability were the least enthusiastic about purchasing coverage online.

The report reasons that customers probably value the loss-control and risk-management services an agent offers for these lines.

Despite the willingness of buyers to buy small commercial insurance online, capacity for doing so at this time is limited. Deloitte shopped for coverage at 14 leading small-business carriers' websites, as well as the sites of six aggregators. Only one from each category allowed consumers to enter risk information, receive a quote and conclude the transaction online. Other sites referred the buyer to agents, or have the agent call or offered the shopper the opportunity to speak to a call center.

The report notes that carriers going direct would probably face resentment from their independent producers and would need to consider “whether they might lose more business than they are likely to gain if they end up alienating their agency force.”

Turning to those who are not likely to make online purchases, 41 percent say they would not purchase because they “don't trust an insurance company to deal with me fairly.”

Special Reports /

Small Business Entrepreneurs Eager to Buy Insurance Direct, Online

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