A second option might be to implement a hybrid, parallel approach — establishing a stand-alone online platform for small businesses ready to take the plunge and buy directly from an insurer, while preserving their agency channel for buyers who prefer to work through an intermediary. Within this approach, there are several strategies insurers could contemplate.

- Buy or build a separate, direct sales entity to reach online consumers:Insurers may choose to launch a direct sales subsidiary from scratch or buy an existing direct writer to parallel their agency company, while perhaps marketing under a different brand to avoid channel conflict. This could allow a carrier to attract those who prefer to shop for insurance themselves online, while providing a more traditional agency relationship for those who still want one. If a carrier only sells select lines over the web, there could also be potential to refer direct buyers to the carrier's agents for additional products, thereby creating cross-selling opportunities and easing channel conflict.
- Align/partner with a company that can offer an online purchase option:In such a scenario, a small-business carrier could test the waters by selling online through another direct insurer's website, offering complementary rather than competing products.
- Affiliate with an online aggregator site: Aggregator sites scan multiple insurance providers for small businesses searching for coverage online. Working through such a site helps insurers target early online adopters while acquiring valuable direct sales experience.
- Sell coverage online direct to the consumer, but offer clients an opportunity to be assigned an agent for additional consultation, coverage, and/or services:In this instance, a carrier would actually close a sale directly with the online customer, but provide buyers with an opportunity to contact an agent afterwards if there are any coverage questions, claims issues, or additional products required. That agent could either be working full time for the insurer (perhaps out of a customer service center) or come from an outside, independent agency. While an independent agent would likely receive a lower commission on a directly generated sale, reflecting their lack of involvement in the acquisition process, they could perhaps make up the difference and then some by having the opportunity to cross-sell additional lines of business. This option could also alleviate concerns of those customers who feel comfortable buying a relatively straightforward coverage themselves online if it will save them money, but can still depend on an agent for support as well as advice on the purchase of insurance for more complex or problematic risks.

What about carriers that decide direct selling is simply not for them? In a future blog, I'll examine how agency insurers might fortify their model to compete against direct online challengers. But in the meantime, you can read our full research report for more information.

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Can insurers have it both ways with small-business direct sales?

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