There are 28 million small businesses in the U.S., and more than 90% of them have fewer than four employees. Each of these businesses is different, but all of them have at least one thing in common: a need for affordable, quality insurance coverage.
That need makes small and start-up business a big market opportunity for growth-focused P&C insurance companies. However, many insurers—encumbered by legacy systems, processes, and distribution strategies—simply aren't able to serve this market efficiently or cost-effectively. Success in sales of insurance to small business requires delivering business owners simplicity, convenience, and quality through a direct distribution model.
For Busy Businesspeople, a Simple Solution
Small businesses don't have CFOs, risk managers, or dedicated insurance buyers. Often staffed by just an owner and a few employees, these companies have found it difficult to navigate the complexity of traditional commercial lines insurance products. Policy applications and underwriting processes, designed for large accounts, don't lend themselves well to self-service or online sales.
To pursue opportunity in the small business market, carriers need to take a fresh look at their underwriting process and make it simple and streamlined. Through our ground-up analysis of what was truly needed to assess a small commercial account, AssureStart designed an online application that requires just four pieces of information that every business owner has at his or her fingertips: a description of operations, the ZIP code, the type of business location (owned, leased, etc.), and the number of employees.
With those four pieces of information, it is possible to underwrite the vast majority of classes of small business. Our online application is also simple because it talks to business owners in language they can understand, devoid of insurance jargon and legalese.
Technology is also connected to simplicity. The commercial insurance industry has a legacy of being confined by the workflows of core processing systems and by the business costs and demands of owning those systems.
Small business owners simply don't have time in their busy day to deal with insurance, so the buying process needs to be convenient. Whether it's building a policy on their laptop while they are at the "corner office" coffee shop, researching options on their tablet over a short lunch, or managing their policy in the middle of the night from a smartphone, business owners expect to deal with a sales platform that gives them the insurance answers they need, when they need them, and on whatever device they are using.
Small business owners also want the ability to fill all their insurance requirements with one company. If you have "gaps" in your product line or among states where you offer coverage, one way to fill those gaps is through partnerships with other providers.
For instance, as a young company, AssureStart is still in the process of building out our national network. We forged a partnership with BOLT Solutions, leveraging the BOLT Platform to allow small businesses to quote and obtain insurance products anywhere in the country.
Business owners want—and deserve—a quality product. The online experience you create for customers needs to assure them that they are doing business with a company that understands them and provides insurance protection on which they can depend.
Your customer portal should provide business owners all the information they need to understand coverages and make informed choices based on the unique risks of their industry and their individual company. You must also deliver products and services tailored to the small business owner.
The assurance of quality must be backed up by effective customer service throughout the policy lifecycle, whether that service is delivered by your own staff or through trusted outsourcers. Partnering with an outsourcer to deliver non-core services can also be a strategy for controlling costs and expense ratios in small commercial lines.
For instance, we chose to outsource our customer contact center. This strategy not only saves us the expense of having to hire and train staff, but also provides consistent, specialized, and expert customer service that can scale dynamically with our business growth.
Some in the industry believe that even small business insurance needs are too complex for buyers to navigate themselves. Keep in mind, however, that the same belief was long held in personal lines and have been proven wrong. In fact, direct-to-consumer sales account for 17 percent of the market today, and that percentage is growing.
Small and start-up businesses present a tremendous growth opportunity for carriers that can free themselves of the shackles of traditional processes and legacy approaches to business and offer an online sales channel. Achieving success in direct sales requires modern technology and effective business partnerships to operate cost-effectively. Most important, it hinges on delivering simplicity, convenience, and quality to business customers.
Greg Tacchetti is CFO/COO of AssureStart, a Seattle-based insurer that sells business owners policies direct to small businesses via its website.
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