Small commercial insurance is on the brink of radical change. A huge demand from their consumers and agents for more digital access and information across all communication channels is driving them towards a future strengthened by digital power.
Personal lines insurance has embraced digital across the entire value chain from marketing and sales to claims handling, and carriers - big and small - are enabling digitization for their businesses and delivering exceptional experiences to their consumers.
The small commercial insurance consumers, usually a subset of the personal lines insurance consumer class, expect the same digital experiences from their small commercial insurance providers that they receive from personal lines insurance companies.
In spite of the inherent challenges, small commercial insurance, a profitable but fragmented business, is poised to take advantage of the digital disruptions to drive better and cost-effective quote to bind process and servicing.
Challenges - through the lens of stakeholders
From a consumer point of view – the process of the quote to bind is an information overload with lots of questions to be answered and documents to be provided, which ultimately leaves the consumers confused about what is best for their business needs. They do not know whether they are receiving what they ought to be covered for.
From a broker/agency point of view - the small commercial product lines are relatively low value in terms of premium and highly transactional with too many quotes being referred for manual underwriting. This creates a significant underwriting cost and frustrates the agents because it takes too long and eats into the profit margin.
From a carrier point of view – the small commercial insurance is a highly profitable line of business, yet the process is manual-intensive with lots of back and forth between agents and the underwriters, which increases the cost of operations. This increase in operational cost becomes an impediment for growth.
The digital route to a great experience
The need is to enable a radical shift in the small commercial insurance industry by helping insurance carriers offer new and distinctive customer and agent experiences through digital solutions. Automation of processes will help increase the experience of customer/agent while speeding up the process and reducing the cost. This is the cornerstone for any upstream or downstream customer experience transformation.
We already see trends like carriers moving to direct channel for small commercial business. However, many still consider broker/agency channel to last a little longer, thereby forcing them to enable this channel as the immediate focus for transformation.
Disruptive technologies like machine learning, predictive analytics, straight-through processing, and leveraging of appropriate third party data for information gathering play a large role in the digital transformation journey. These provide a distinctive digital experience supported with upfront risk underwriting, thereby enabling operational efficiencies.
A carrier can see quick benefits of this transformation in the form of
- Improved accuracy of risk assessment: An effective loss model that helps in the upfront assessment of risks
- No-touch underwriting: Increase in straight-through processing
- Ease of information: Reduces the number of questions significantly through pre-fill using third party data
- Enhanced user experience: Creates a simpler and more engaging digital experience for agents and customers