How might a direct writer of small-commercial lines get the attention of prospects and close a sale without having agents or brokers to make their case?
This is not an academic question. To a limited degree, some coverage is already available to small-businesses directly from carriers over the Web. In addition, about one-in-five small-commercial buyers are open to purchasing their insurance direct online, depending on the coverage, the price, and ease of doing business, a recent survey conducted on behalf of the Deloitte Center for Financial Services revealed.
For those insurers intrigued by the potential for selling small-commercial lines direct to consumers, a key challenge is how to create awareness of this purchase option and convince prospects to give the new channel a shot.
There are a number of possibilities a small-business direct writer might consider, including:
- Mass advertising — an option heavily leveraged by direct writers in personal lines. Carriers can advertise to create awareness about the possibility of buying small-business insurance directly from a carrier online, as well as to build brand awareness about the individual company.
- Going viral, with carriers spreading the word through social media initiatives and Web-search sponsorships. This is a logical choice, given that those already leading active personal and commercial lives online are likely to be more open to Web-based prompts when it comes to buying small-business insurance that way.
- Affinity marketing, in conjunction with a large entity that interacts often with small-business buyers. Investing in a wholesale channel relationship with a group that naturally intersects with a direct insurer's target prospects could involve a large supplier of retail or wholesale products, or perhaps an association endorsement.
- Bundling the direct sale of commercial insurance with the delivery of other small-business needs, such as accounting and tax services, alarm systems, office supplies, human resources and group benefit services, health insurance, waste disposal and the like.
- Cross-selling, leveraging existing insurance relationships. Deloitte's survey found that buyers who have already purchased personal lines coverage direct from carriers over the Web are much more likely to be open to the idea of using the same channel to meet their small-business insurance needs.
Another consideration for carriers trying to solve the direct marketing equation involves determining incentives that might be employed to persuade a small-business prospect to drop their agent and buy over the Web. Deloitte's survey found that price is likely to be a prime motivator in convincing buyers to switch to the direct channel, but a lower cost alone should not necessarily be the only competitive advantage direct writers have to offer.
Accessibility and convenience could also be important selling points, in that agents are generally not available to sell coverage 24/7. Small-business owners are often hands-on with many aspects of their operation, and therefore don't have much time to spare for insurance issues during 'normal' business hours. Some prospects might not want to take up 'prime' time dealing with an insurance intermediary, especially if it's relatively easy to shop for and buy coverage online after hours, at their leisure.
Meanwhile, a number of participants in a pair of focus groups run on behalf of Deloitte prior to the survey's deployment complained about the lack of personalized service from their agents. This is not surprising given the relatively modest premium generated by the average small-business account. As a result, it is often not economically viable for an agent to provide much in the way of value-added support.
Therefore, additional service capabilities could conceivably create another competitive edge for direct writers of small-business lines. Providing self-service options might be very helpful, such as the ability to store policy documents online so they can be easily retrieved electronically, downloading insurance cards or certificates of insurance as needed via a tablet or smartphone app, or processing endorsements when required over the Web.
In addition, “concierge” service (such as providing a dedicated account handler) or perhaps offering customized information on loss control, safety or other business management issues — tailored specifically to the buyer's particular industry — might be another important attraction to direct buyers.
In fact, traditional agency carriers could also benefit from adopting such online service options, both to compete with emerging direct writers and those employing more traditional distribution systems.
For more information about the survey results and insights into the challenges facing insurers interested in selling direct, as well as those looking to fortify their book of business against direct sellers, you may download Deloitte's “Voice of the Small-Business Insurance Consumer” report by clicking here.
In addition, you may listen to an archived webcast reviewing the main takeaways from the survey as well as the implications for carriers and their intermediaries. To register, click here.
How might a direct writer of small-commercial lines get the attention of prospects and close a sale without having agents or brokers to make their case?
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