make accommodations for everyone.
One problem Deloitte identified,
according to Friedman, is some buyers
reported they can’t buy everything online.
“Some carriers are only selling one
or two lines of coverage so the idea is
if you have the agent as a backup you
have them there to sell other policies
and round out the account with some
cross-selling,” he says.
Lucker believes it’s a difficult problem
to resolve because only a few companies
sell small commercial products direct
and those are virtually all monoline. “No
one is selling all the products you need
online,” he says. “There is no carrier that
sells more than two (small business)
products online.”
It’s an expensive proposition to start
up a direct company that writes all the
products a small business might need,
adds Lucker. If an insurer is going to be a
direct writer, they have to write in all 50
states and territories, which means there
is an enormous development expense
and a huge regulatory filing/compliance
issue to write BOP, commercial auto,
workers’ comp, or cybersecurity policies
in 50 states.
“A direct writer has to be highly
automated, which means you need very
good rating and underwriting models
to create the no-touch or low-touch
process,” he says. “This creates significant
expense and regulatory issues because
it’s easy to file a BOP or a workers’ comp
policy in more traditional means, but
if you are going to fully automate you
have to file in an automated pathway. In
small commercial, that process is done
by people. The human touch process has
to be analytically automated and filed. It’s
not an insignificant process. If you look
at the options we outlined, the hybrid
model potentially emerges as the most
expeditious and cost effective.”
A New Generation
Lucker points out the Deloitte research
indicates a new generation of insurance
customers seem to be willing to bypass
agents, but he cau-
tions that as those
younger people
become business
owners they might
not retain the kind
of technology confi-
dence that will allow
them to disregard
agents.
“What some
studies are showing, unrelated to
insurance, is life
stages tend to take
over and as people
get older with
families and kids,
time becomes more
precious. That’s
where the intermediary helps reduce the load,” says Lucker.
“The agent can do what he knows you
need. Time will tell, but there does seem
to be a little movement away from this
intense focus on technology dependency for certain things. Some people we
interviewed were young business owners
as well and it was uniformly distributed.
The 17 percent that are unhappy with
their agents are not all young people;
People are growing up with the idea
they can not only do everything online
but on their phones as well, points out
Friedman. Whether this will translate
into something as important or as
intricate as a small business insurance
transaction will take some time. Personal
auto is a more mature market as far as
direct writing. With small commercial
there are different challenges.
“Small commercial is more complex,”
he says. “Nobody wants something to go
wrong when there’s a claim. Your business
is at stake if something goes wrong.”
Superstorm Sandy was a good exam-
ple of this, according to Lucker. Small
business owners assumed when the pow-
er went out that someone was going to
pay for spoilage or business interruption,
but there were many business owners
who were taken by surprise when they
discovered they didn’t have such coverage because either they didn’t know who
to ask for such coverage or they didn’t
want to pay the additional premium
expense and declined the coverage.
Which Way to Go
Friedman believes there are ways for
carriers to leverage the technology
advances throughout the organization, whether it is marketing, the sales
process, underwriting, pricing or claims.
These advancements will be leveraged
internally.
“In some ways this might help the
agents to cut out some of the minor
service work and free them to deal with
more complex accounts and give customers a sense of confidence,” he says.
“There may be more online sources that
can be advisory. You see more automation in the claims process where the
agents are not always directly involved,
although people fear losing an advocate
when there’s a claim filed. I don’t know
if an agent can make a huge difference
there, but it helps to have someone in
your corner.” ITA
Satisfaction with services
provided by current agent,
Source: Delloitte Center for Finacial Services,
“Voice of the Small Business Insurance Consumer Survey,” 2015.
Very dissatisfied,
2
Somewhat dissatisfied,
3
Very Satisfied,
52Somewhat
Satisfied,
31
neither satisfied nor
dissatisfied,
12