Deloitte's focus groups were split into two segments—those with 10 or fewer employees and those with between 11 and 50 workers—and represented a wide range of industries. While the participants in the first group appeared to be more intrigued than their larger counterparts by the idea of flying solo on their business-insurance purchases, attendees at both sessions were enthusiastic in their brainstorming with the facilitator about how carriers might convince them to buy direct.

One participant from a professional-services firm opined that “the broker model is a dying business with lots of layers we don't see. Business insurance moving to direct sales is therefore inevitable. There are not enough brokers to handle all of these small businesses economically.”

He added that “insurance brokerage is not a hot field. The people in it are aging. Younger people are not going into it in big numbers. And with the Web, there is so much information at your disposal.”

“If you easily compare coverage and prices online, why not?” shrugged one small manufacturer.

So, what might it take to convince small-business consumers to drop their agents or brokers and buy direct? As you might expect, price would be a key consideration, according to those in the focus groups. If carriers were to bypass their agents, these consumers would expect a significant but not unreasonable discount to reflect the lower frictional costs.

When asked point-blank how much they would expect to save by going direct, half of the smaller-employer group said 15-20 percent, while the other half said 10 percent. Among the larger employers, half said it would take a 10 percent discount and the other half 15 percent.

“I don't think agents and brokers make as much as people think,” said one. Another reasoned that he didn't expect more than 15 percent in savings because “I want to make sure the insurer has the resources to hire qualified [customer service representatives] to provide the help we would need without our brokers.”

Service considerations were also raised. “Will I still get my certificates of insurance within minutes, as I do now from my agent?” wondered one attendee.

The focus-group members seemed to warm to the idea of buying direct if the carrier catered to their needs with enhanced CSRs.

“Insurers could offer concierge service to their best customers, especially those with multiple policies, in return for handling all of [their] business,” suggested a personal-services provider. A small retailer said that “if you still want services, you could pay for it from the carrier, like having a private banker.” A food-services attendee in the larger-employer group agreed that “if the insurer gives you a one-on-one internal agent within their company, someone knowledgeable about your business and dedicated to your account, it might make a difference.”

In the two focus groups, most bought multiple coverages from one insurer, and many had stayed with the same carrier for five years or more. Even one who was adamant at first about not discarding their broker to buy direct wondered aloud as the discussion progressed why they really needed an intermediary if they were happy with their carrier and renewed with them year after year, adding that if the insurance company offered them a personal-service representative, buying direct might be acceptable.

Another suggested they could try buying direct if the price and service options were right, but if that didn't work out, they could always approach an agent or broker to shop for a new carrier.

However, a few were skeptical about the whole idea, and even those who were open to the suggestion expressed some reservations.

One big factor was the notion that insurance policies are difficult to understand (a point I covered in great detail in two earlier blogs), with the majority asserting that policies sold directly to the consumer would have to be simpler to comprehend.

Others weren't sure carriers could be trusted, but these same individuals conceded that agents and brokers aren't necessarily trustworthy either, driven as they are by concerns over commission income.

A few said they liked having an agent or broker because it gave them someone to sue if a claim exposed a coverage gap they didn't expect or were assured did not exist.

So direct sales of small-business policies won't necessarily be a slam dunk, and it might not be for all consumers—just like it's not for everyone buying personal lines. But the fact is that many small-business consumers may in fact be open to the idea of cutting out the middle-person and buying direct from a carrier, just as many already do with personal lines.

Agents looking to head off the loss of such business need to remember that if they are primarily a price shopper and policy peddler, they may be vulnerable not only to losing business to other intermediaries who offer more comprehensive services in loss control, employee benefits and the like but also to carriers who cross the final frontier and sell commercial lines to customers directly.

On the other side of the equation, carriers that assume an agent will always need to be part of the distribution equation in small-business insurance should perhaps reconsider that value proposition. Those who ignore the potential of direct sales might risk losing a chunk of this increasingly commoditized customer segment to more innovative competitors.