As many as half of small-business insurance consumers are open to the idea of buying at least one of their property and casualty coverages directly from a carrier over the Internet, without having an agent or broker shop for them or advise them, a new study by Deloitte has revealed.

Direct sales of personal auto insurance over the Web has been a viable distribution platform for a number of years, keeping the heat on agents and brokers to demonstrate their added value if they want to retain, let alone expand their market share.

However, Deloitte's research indicates that a day of reckoning for intermediaries — as well as for those insurers who depend on them exclusively to distribute their products — might similarly be looming sooner rather than later in the small-commercial market, as carriers begin to seriously explore the potential for reaching buyers via a one-stop, Web- or mobile-based transaction.

It would be understandable if many are skeptical about the potential for disintermediation in reaching small-business customers, if only because it simply hasn't yet been widely attempted here in the United States, beyond a few lines of coverage.

Indeed, the conventional wisdom is that small-business consumers probably don't have time to shop for coverage on their own — and even if they do, their lack of an insurance background, the complexity of coverage, as well as their service requirements would likely keep them solidly entrenched in the agency camp for the foreseeable future.

However, our hypothesis is that given the growing proclivity of individuals to live their personal and business lives online, many buyers of small-business insurance might indeed be ready, willing and able to conclude a transaction on their own, whether through their desktop, laptop, tablet or perhaps even their smartphone.

We tested that hypothesis in two primary research projects conducted by Deloitte's Center for Financial Services. The first was a pair of focus groups convened over the summer of 2012. We then followed-up with a much broader online survey this past March, conducted on Deloitte's behalf by Exevo, a research organization specializing in this segment. The survey queried 751 respondents making purchase decisions for companies representing a wide array of industry groups and different-size firms.

We asked a variety of questions designed to determine the appetite for making a direct purchase of small-business insurance, including:

Had the respondents ever shopped for commercial insurance online, and if so, what did they think of the experience?
How likely might they be to buy such coverage direct from a carrier over the Web without a personal agent to guide them?
Which, if any, conditions might convince them to conclude a transaction over the Web, with or without the assistance of someone in a licensed service center?
What factors might discourage them from buying direct online?

The survey found that while the direct purchase of commercial coverage might not be attractive for all small-business insurance buyers — anymore than it is for those buying personal lines today — a significant segment appears to be very eager to take the plunge and buy direct, while many others are at least keeping an open mind about the option.

The survey identified three categories of respondents, including:

“Eager Beavers” — representing anywhere from 10-20 percent of those surveyed, depending on the line of business — who say they would be “very likely” to conclude a transaction without their own agent. Many of these respondents are already shopping for small commercial coverage over the Web.
“Fence-sitters” — those who say they would be “somewhat likely” to buy direct over the Web, depending on the circumstances, representing about one-third of respondents.
“Naysayers” — representing about half of the respondents, who say they are “not very likely” to buy without an agent, but may be open to buying direct if certain reservations, such as trust issues, are overcome.

Over the course of the summer, I'll share with you some of the survey's key takeaways, offer suggestions on factors to consider for insurers thinking of implementing a direct distribution model, and discuss lessons that can be learned from those selling direct that could help carriers which decide not to use that platform.

In the meantime, you can download Deloitte's “Voice of the Small-Business Consumer” report by clicking here.

Special Reports /

Are Small-Business Consumers Ready to Buy Insurance Without an Agent?

Related Stories

Recommended For You