It is no “small” question: How do you sell insurance products to a company that doesn't understand its exposures, that doesn't have a lot of capital, and whose owner often doesn't want to do much beyond “point and click” when it comes to purchasing the coverage they do buy?
And why should agents consider trying to sell to these prospects, considering the amount of premium (and commission) to be gained versus the amount of work they may have to put into it?
Yet a number of major carriers — and many savvy agents — are currently targeting small business with renewed vigor, devoting extensive resources to this difficult-to-crack market. Some are using technology, social media, and predictive analytics; others are leveraging their relationship-building skills. Small business, they maintain, is the great untapped market that holds a bounty of promise for the P&C industry.
Small businesses underserved
“One of the largest and most positive opportunities is to write small business insurance in America,” says Tom Barrett, president of the Midwest and Southeast regions of the Strategic Insurance Agency Alliance (SIAA). He adds, there are thousands of businesses “overlooked by the insurance and broker communities that are totally underserved.”
Many insurance carriers are likewise bullish on the small business sector. “We love the small business market; it's the backbone of America,” says Mike Seling, vice president of business development/regional operations for Accident Fund Insurance Company of America, a mono-line company in Lansing, Mich., that specializes in workers’ compensation coverage. “What's more,” he adds, “it is tremendously profitable.
“From a retention perspective, it stays around longer; it's not shopped,” he points out. “We want to write more of it.”
Trust must be established
Tiku Raval, senior vice president at Ironshore's Small Business Insurance unit, concurs: “The market itself is huge, with about 28 million small businesses representing nearly $100 billion in premium. There is tremendous opportunity ahead.”
As in any agent-client relationship, value must be proven — and trust must be established. “One of the biggest challenges small-business owners face is a full understanding of their risk exposures, and in turn, knowing exactly what coverages they need to protect their business and themselves,” says Jim Williamson, division president of North America Small Commercial for Chubb.
Knowing your prospect
The first step to tackling this market is gaining a thorough understanding of both the needs of the small-business owner and the products available to them.
Many insurers offer Businessowners’ policies (BOPs), which are “uniquely designed to serve a small business owner,” explains Mike DeHetre, vice president of underwriting and product development at Travelers. Although BOPs typically include general liability, property and business interruption coverage, some larger insurers often try to customize the BOPs for the particular business. Clients need to be informed from the start that BOPs do not provide professional liability, auto insurance, workers' compensation or health and disability coverage.
Pressed for money & time
Small-business owners are often pressed for two things: money and time. The former, says Christine Sadofsky, a managing principal at Integro U.S.A. Inc. in New York City, “is a catch-22 issue because if a loss occurs, they don't have the financial backing to defend themselves,” so it's imperative that they allocate the right funding to cover the major exposures.
Additionally, “That owner is wearing many hats, concentrating on the business 12 to 14 hours a day,” said Steve Tombarelli, vice president of the SIAA's Business Insurance Advantage program.
Knowing that small-business owners are understandably stingy with both time and funds is important to bear in mind when approaching these prospects, for this set will part with neither of those things unless they first have your trust.
Gaining a presence — and favor
Although no agency ever gained the trust of a client with its website alone, it's important to establish an online presence in more than one spot. Having an effective agency website (see NU's May cover feature on building a powerful agency web portal) and maintaining a personalized identity on social media will help to position your agency as a knowledgeable, trusted team of professionals.
Having a website on which you’ve made a considerable investment of time “is another tool to say, ‘I’m a real business,’” says Barrett. “This is my website, this is my story, these are my specialties, this is my competitive advantage, these are the products and services we offer to our community.
“You need that immediate service for the customer who wants a certificate of insurance, a list of scheduled items, or to get his own ID card for auto insurance,” he adds. “You need to have those service tools available.”
“Once a policyholder, most business owners expect a digital experience to manage transactions such as paying the premium, requesting a certificate, or viewing the policy,” notes Matt Kirk, senior vice president, chief sales and distribution officer for Small Commercial at The Hartford.
Use social media to connect with business owners
When it comes to social media, Barrett continues, “You need an agency Facebook page talking about the things you are doing in the community. Highlight coverages. Include tips to prepare for winter and storms, how to have a safer home when you are away.”
“I use social media quite a bit to connect with business owners so they see who I am on a real level and vice versa,” says J.P. Delaney, sales manager at Louisville, Ky.-based Logan Lavelle Hunt Insurance Agency LLC. “During the sales process I try to take the financial aspect out of it and build a relationship into it.”
Having an online presence can help, however, it's the personal connections with prospects and customers that can give agents the edge in working with small-business owners. Get out and demonstrate that expertise among the people who will find it the most valuable.
“Get involved with the local community and organizations that are industry-specific,” says Delaney. “If you focus on restaurants, get involved with the restaurant association, or the small-business association. The more you get involved, the more you are the face of your company, the more that you’re going to get in return.”
Perseverance & dedication
Delaney says it takes perseverance and dedication. “There will be many days when it's 90 degrees and sunny out, and you don't want to go to one of these meetings. But those are the days you need to,” he stresses.
During those meetings and in all interactions with prospects, it's important for agents to position themselves as go-to experts on all matters of insurance. “You’ve got to build that trust from day one,” Delaney adds. “Without trust, there's nothing there.”
Once that's established, small-business owners are more likely to purchase insurance products once they understand the agency has the client's best interests in mind. Sometimes, that can extend beyond the traditional set of business products, though that depends on both the level of trust achieved and the buyer's appetite.Delaney's firm includes a wealth-management division, benefit division and P&C division. “During my sales process I talk about all those things we have to offer and round out the whole account.”
Many small-business owners may use the Internet to research insurance products, but agents should not assume that's a deterrent to setting up a face-to-face meeting.
“Small business insurance, to a point, is complicated. Business owners are looking to understand what coverages there are and what they need,” says Tombarelli. “They need a local independent agent to be their advocate to validate and help them navigate through the claims process.”
“As an independent agent, my small businesses live in my community, go to church with me, our kids play soccer together,” adds Barrett. “We’re insuring relationships.”
Selling to the younger set
One issue increasingly prevalent in the small-business market is the rise of millennials as owners and decision-makers. Those born between the early 1980s and early 2000s often do much of their researching and purchasing on mobile devices.
“Those people don't go to storefronts,” said Doris Gonzalez, mid-America field sales account manager for Deerfield Beach, Fla.-based QQSolutions, a division of Vertafore. “This is the world of Amazon and Uber, where I can go on my phone, order what I need and get what I want in 30 minutes.”
Seling adds, “Millennials are looking for ease of use, but they don't know what they don't know. They could buy Workers’ Comp not knowing they also need GL or Commercial Auto.”
SIAA's Barrett says, “The ‘one-clicks’ may not be the ideal prospect for the independent agent. The business owner with a sophisticated account with a nice home, who needs a trusted adviser — that's someone who's going to sit and take the time.”
That isn't to say there aren't additional advantages for agents in using online tools during face-to-face meetings. “Technology has quickened the pace from the time between a visit to coming back with a proposal,” says Tombarelli. “As agents become more tech-savvy, they have more tools and information to show businesses — for example, with cyber liability claims, or when disasters take place — that their business may not be covered as well as they think.”
Be more aggressive
Agents looking to ramp up their small-business market share need to be more aggressive than they have in the past, according to several experts. Working one-on-one with small-business owners can also lead to the purchase of additional coverage, such as personal-lines products. It takes focus and dedication.
“In the small commercial market, relationships are really important,” says Tombarelli. “It's the ability for the business owner to validate they’re working with the right agent, then to make sure the agent is servicing their needs and is not just a touch point at renewal time; that they understand the business and the needs of that business, and they are part of that community. They are also a small-business owner in that community.”
Nancy Grover is the founder and president of NMG Consulting, a media/communications entity based in Florida. She can be reached at firstname.lastname@example.org.