In 2010, Hiscox became the first insurer to offer many professional small businesses the ability to get their business insurance quotes online, buy there and get their policy immediately. Today, three years later, Hiscox is the leader in this space and still the only insurer in the US doing it in a big way. Is it just me or does it feel that business insurance is still stuck in the 1990s?
Many of you have probably read the thought-provoking report from Deloitte: Voice of the small-business insurance consumer. I have a great deal of respect for the Deloitte team. They've got some great people there, and it's a good report, but there's one aspect I wanted to expand on.
It's not about 'are buyers ready to take the direct sales route?' The agent vs. direct argument is a red herring. It's a more fundamental question than that. Modern consumers want what they want, when they want it, and their small business insurance purchases are no different.
Let me explain.
Two weeks ago I attended our most recent consumer focus groups. I love going to these things and hearing first hand what our potential customers are thinking, feeling, and doing. The group in question comprised a range of small businesses from a personal concierge service to an IT consultant. Each business had under 5 employees, and they all had insurance through a mainstream US insurer (not Hiscox).
When we finally got around to talking about the issue of insurance, the emotional reaction was palpable:
- "When I call my insurer to talk about my policy, as soon as they realize that I am small it's so obvious that they can't wait to get me off the phone quick enough. They just can't be bothered to spend the time explaining stuff to me."
- "As a small business time is money, and so I dread calling my insurer and getting the standard 5 minute wait to get through to someone."
- "As a small business owner, I rely on turning things around quickly for my clients, and so it's frustrating to wait for a week to get a response."
- "When I speak to one of their people, they haven't got a clue as to what my business is about."
The list of such reactions goes on. Small business owners have taken notice of where they stand in the insurance industry's pecking order.
The point I'm making is simple. Our industry sector – insurance – is stuck in the past. Consumers now expect immediate gratification, the ability to research online when it suits them, the ability to call a business at 5:01pm and not get the 'sorry we're closed' message, etc. They now judge their shopping and service experience not on the insurance industry standard, but by their wider experience set of Amazon, Zappos, Expedia, eTrade, and all those other brands they use in their daily lives. And this principle applies to all channels that customers want to use. Some customers prefer to use their Main Street agent. Some like the convenience of an online experience. Others just like to pick up the phone. But underpinning all these different engagement models is this theme of customer expectations changing, and whichever channel a customer chooses to deal with us through – agent, online or telephone – we want to make sure that their experience is consistent with our brand promise and their expectations of what great looks like.
And how has a relatively recent entrant like Hiscox been able to establish first mover advantage in the online space and make it count? The answer to that is straight forward.
First and foremost, the customer is at the center of what we do. We try to think like Amazon, not an insurance company. Real customer service reviews on our website – nearly 10,000 of them – warts and all. A 14-day no-quibble money back guarantee for anyone who buys a policy and changes their mind. The ability to pay the annual premium in monthly installments without any extra charge to help cash-flow. Extended opening hours for service and sales.
Our lack of legacy in the US has also been an advantage in that we haven't been constrained by the way things were always done before. What's more, our legacy in the UK – where the shape of the business insurance market is several years ahead of the US and where Hiscox is a market-leader – has given us a crystal ball to see where things are heading. We have a team that's been there, done it and got the T-shirt when it comes to understanding how to grasp the opportunity for direct sales to small businesses in the US.
Most of Hiscox's business comes through agents and brokers, and that will continue even as our book of small, simple risks grows. One of our key target segments are the Professions – everything from technology firms to photographers, and many things in-between. Larger businesses with more complex needs will always be best served through the traditional broker model. At the other extreme, we believe that the smallest businesses have the choice of whether they want to deal with their local agent or are confident enough to use an online service (backed up by expert agents in a service center).
We're building strength in all these areas for our target segments. It's interesting to see how channels are converging, with our most recent development being a pilot to allow retailers access to our online small business products through a small number of wholesale agents. It levels the playing field for agents enabling them to get immediate access to quote/bind, with the confidence that they're working with an insurer partner that is serious about service and puts the customer at the center of our universe.
The customer is in charge, and everybody's invited along for the ride. We encourage retail agents interested in accessing our admitted online products to get in touch with us for a list of participating wholesale agents.
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