What smart brokers can do to win the SMB market
By leveraging technology, brokers free up resources to apply the 'high touch' necessary to secure and nurture new business.
How does a brokerage successfully carve out a piece of the fast-growing SMB (small and medium business) market?
The answer is simple: Get creative in leveraging the tech resources available to you.
To a significant extent, the technologies that make brokerages more agile operationally can do more than free up producers to court new clients. They also could be used to form new revenue streams.
The allure of the SMB market
There are plenty of reasons for an insurance brokerage to focus on SMBs. For starters, there are a lot more of them than the behemoths. They represent over 90% of the business population in the U.S., at 33.2 million, and are growing fast.
In 2021, about 5.4 million new business applications were filed, up 23% from 2020. (The Small Business Administration defines small businesses as those with fewer than 500 employees.)
When nurtured and managed well, these organizations have the potential to grow into bigger businesses. And as they grow, so will the brokerages they partnered with. Forward-looking brokers understand they have a lot to bring to the party in terms of expertise and capabilities, especially with technology to augment their capacity as risk advisors.
By leveraging technology to improve operational efficiencies, brokers will free up resources to apply the “high touch” that it takes to secure and nurture new business.
Forging new revenue streams
Here’s an example of how tapping into the right tech can help a brokerage open the door to new business relationships.
The brokerage firm had a good base of business with construction contractors. But it was struggling to keep up with the job of reviewing clients’ subcontractor certificates for compliance concerns. Compliance review can be a hugely time-consuming and manual process and a costly drain on a broker’s resources. It is critical, however, to ensure that subcontractors have the capacity to meet the requirements of a job.
The brokerage’s executives approached our firm for assistance in lessening the work load. A tech solution called Certificate Compliance Review (CCR) was developed that automated the process. Artificial intelligence enabled a faster scan to identify what information on certificates was missing and/or needed and to flag issues like missed submission deadlines.
The solution was so effective and efficient that the brokerage attached a fee to it and offered CCR as a stand-along product to other contractors, creating a healthy new revenue stream.
Enabling the ‘high touch’ that wins SMBs
Brokers who seek to carve out a large piece of the SMB pie need to be very hands-on in understanding and anticipating their clients’ risks, as well as ensuring they are optimally positioned with a positive story on risk management to tell insurers.
They understand that they can’t just phone it in to meet this imperative, given the fierce competition for this market. A sharpened tech edge not only frees up operational resources so that brokers can devote more time to client cultivation. It also enables brokers to wow clients with a quick and thorough response.
Think about it:
- AI-driven tech solutions can automatically read an existing policy, extracting key coverage information, and facilitating the process of choosing the right markets for the client’s risks.
- AI can boost the broker’s ability to assess the coverage options, flagging where the client can be better serviced based on its loss history, especially when compared to the industry’s loss history across a particular region.
- Tech solutions can facilitate the process of securing and comparing multiple quotes; done manually, that can take hours, if not days, especially when there often are 11th hour quotes slowing the process down.
- Tech advances are continually creating more efficiencies for managing various parts of the policy life cycle. For example, a new dimension to policy checking when multiple source documents are involved is the “x-ray” feature. It enables the broker to go to the exact point in a document, providing instant context when discussing a policy variance issue.
With smart technological solutions, the broker has the ability to go back to the client with better coverage, faster. The quality of the output is markedly improved. The ability to engage with SMB clients and prospects in 24 hours goes a long way toward solidifying client relationships.
SMBs: A must-have for brokerage survival
In the last five years, brokerages of all sizes have recognized that tech deployment is necessary to be future-ready. Failing to embrace these possibilities will be a competitive detriment.
The operational efficiencies that tech makes possible are critical to supporting both top and bottom-line growth. Cloud-based solutions are scalable, and the investment technology improvements once required are far less onerous as a result.
AI-driven technologies can facilitate stronger customer relationship, provide smarter prospect intelligence, and extract better and more accurate information to delight of customers.
When it comes to insurance technology, there’s never going to be a better time to seize the moment.
S. Steven Salar is president and head of Insurance Operations at Exdion.
These opinions are the authors’ own.
ALM’s Small Business Adviser is a LinkedIn group where small business owners can gather to network, have discussions and keep up with the trends and issues affecting their industries.
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