Voice of the small-business insurance consumer Are buyers ...
嚜燄oice of the small-business
insurance consumer
Are buyers ready to take the
direct sales route?
Deloitte Center
for Financial Services
Contents
Introduction: What should small-business carriers
be thinking about in terms of direct sales?
1
Survey findings: Who is open to buying direct over the Internet?
3
Reality check: What operational factors should carriers consider
if they are interested in selling direct?
10
Conclusion: Where do small-business insurers go from here?
14
Survey methodology
15
Acknowledgments and contacts
17
2
Introduction: What should small-business
carriers be thinking about in terms of
direct sales?
Direct sales of auto insurance to consumers has been a
prime distribution platform for a number of years, keeping
the heat on agents and brokers to demonstrate their
added value if they want to retain or expand their market
share. However, a day of reckoning for intermediaries
on small-commercial business might similarly be looming
sooner rather than later, as carriers begin to seriously
explore the potential for reaching buyers directly via a
one-stop, Web- or mobile-based transaction.
It would be understandable if many are skeptical about
the potential for disintermediation in small-business lines,
if only because it simply hasn*t yet been attempted to any
great degree here in the United States. The conventional
wisdom is that such consumers probably don*t have time
to shop for coverage on their own 每 and even if they do,
their lack of an insurance background, the complexity of
coverage, as well as their service requirements would likely
keep them solidly entrenched in the agency camp for the
foreseeable future.
However, our hypothesis is that given the growing
proclivity of individuals to live their personal and business
lives online, many buyers of small-business insurance might
indeed be ready, willing and able to conclude a transaction
on their own, whether through their desktop, laptop,
tablet or perhaps even their smartphone.
We tested that hypothesis in two primary research projects
conducted by Deloitte*s Center for Financial Services 每 first
in a pair of focus groups over the summer of 2012, and
then following-up with a much broader online survey
during the winter of 2013.1 Deloitte found that as much
as half of the small-business insurance market might be
quite willing to buy direct from a carrier over the Internet,
without having an agent or broker to shop for them or
advise them, given the proper circumstances.
But what are the ※proper§ circumstances that might
convince a small-business prospect to take the leap and
discard their intermediary to buy one or more of their
insurance policies over the Internet? What incentives,
reassurances and educational material might have to be
provided to create a comfort zone for online shoppers?
And what marketing and operational conundrums
might carriers encounter if they choose to go direct to
consumers? Could carriers still face many of the same
challenges even if they decide not to go the direct
sales route?
Deloitte launched its research initiatives and tapped the
experience of in-house subject matter specialists in part
to scope the potential market for direct small-business
insurance sales. In addition, we looked at what it might
take for carriers to do business directly with increasingly
tech-savvy and Web-centric consumers, concluding that
such efforts are likely to require a group of enhanced
capabilities across the insurance company value chain. And
we suggest that many such upgrades might be required
regardless of whether a carrier opts to explore direct
distribution or to stick with its existing agency channel.
As used in this document, ※Deloitte§ means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see us/about for a
detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules
and regulations of public accounting.
1
Please see page 15 for details on our research methodology
Voice of the small-business insurance consumer Are buyers ready to take the direct sales route?
1
Deloitte*s ※Voice of the Small-Business Consumer§ online
survey of 751 respondents in March 2013 每 representing a
wide array of industry groups as well as different company
sizes (both in terms of the number of employees and
annual revenue) 每 asked a variety of questions about the
small-business customer*s insurance purchase experiences
and expectations, including:
? Whether the respondents had ever shopped for
commercial insurance online.
? If they would be willing to buy such coverage direct
from a carrier over the Web without a personal agent to
guide them.
? What factors might cause them to hesitate or shy away
from buying direct online.
? Which, if any, conditions might convince them to
conclude a transaction over the Web, with or without
the assistance of someone in a licensed service center.
The survey found that while the direct purchase of smallcommercial coverage might not be attractive for all smallbusiness insurance buyers 每 anymore than it is for those
buying personal lines today 每 about one in five are actually
eager to take the plunge, with another third quite open to
the notion (see Exhibit 1). The question is how an insurer
might reach such prospects, as well as how to effectively
sell to and service them once a carrier makes a direct
connection.
Exhibit 1. How open are small-business respondents to purchasing direct online?
Likelihood of buying one or more business insurance policies over the Web, direct from an insurer
100%
80%
16%
5%
22%
47%
60%
14%
32%
40%
17%
18%
35%
39%
15%
31%
40%
35%
20%
0%
48%
18-25
54%
26-34
54%
48%
38%
35-44
43%
45-54
55-64
65 or over
11%
14%
34%
29%
Age
100%
49%
80%
60%
Likelihood of
buying business
insurance online
directly from the
insurer
19%
13%
16%
30%
49%
38%
34%
51%
38%
46%
55%
57%
Less than
$100,000
$101,000 to
less than
$250,000
$250,000
to less than
$500,000
$500,000
to less than
$1 million
$1 million
to less than
$5 million
$5 million to
less than
$20 million
28%
38%
40%
20%
0%
Annual company revenue
Very likely
Somewhat likely
Not very likely
Source: Voice of the Small Commercial Insurance Consumer Survey, Deloitte Center for Financial Services, March 2013
2
Survey findings: Who is open to buying direct
over the Internet?
While relatively few opportunities exist today 每 outside of
commercial auto and professional liability 每 for someone
looking to complete a purchase of small-business insurance
coverage on their own from a carrier online, Deloitte*s
survey found that many consumers have already begun
moving in this direction.
Among buyers of property, general liability, businessowners policies and professional liability coverage,
nearly one-in-five surveyed had initiated their purchase
online, either via their insurance company*s website or
through one of the aggregator sites that help shoppers
solicit and compare quotes from multiple sources. Smallbusinesses have also gone to the Web to shop for other
coverages, including workers* compensation, albeit in
smaller numbers.
It should be encouraging for those considering direct sales
to find such a significant segment of respondents testing
the online shopping experience 每 even though, as noted
earlier, direct transaction capabilities offered by commercial
insurers are limited.
To confirm this limited capacity, we shopped for coverage
on the websites of 14 leading small-business insurance
carriers, as well as six aggregator sites, and found only one
from each category allowing consumers to enter their risk
information, receive a quote, and conclude a transaction in
a single sitting online. The other insurance company sites
refer prospects to an agent in their ZIP code, offer to have
an agent call them with a quote, or provide an opportunity
to speak with someone at a call center. The other aggregators either refer shoppers to relevant carrier websites or
arrange to have an agent contact them to complete
the process.
However, the fact that so many respondents are already
going to the Web to proactively shop for small-business
insurance on their own, rather than passively waiting for
an agent to shop for them, indicates that a segment of the
market is likely primed to take the next step and complete
actual transactions on carrier and aggregator websites, if
given the chance.
Indeed, the survey results suggest that there may be an
early-mover advantage to be had here, with carriers that
build this capability positioned to connect with those
already indicating an openness and desire to purchase at
least one of their small-business coverages directly from an
insurer over the Web.
What do you think about the
possibility of buying your smallbusiness coverage direct from an
insurer, without an agent or broker to
shop for you or advise you?
※If you can easily compare coverage and
prices online, why not?§
※I would want to be sure the insurer has
the resources to hire qualified [customer
service representatives] to provide
the help we would need without our
brokers.§
※Insurers could offer concierge service to
its best customers, especially those with
multiple policies, in return for handling
all of my business.§
※If the insurer gives you a one-on-one
internal agent within their company 每
someone knowledgeable about your
business and dedicated to your account
每 it might make a difference.§
※There are not enough brokers to
handle all of these small businesses
economically.§
※With the Web, there is so much
information at your disposal.§
Source: Small-business insurance focus groups, Deloitte Center for
Financial Services, June 2012
Thus far, despite the limited transaction capabilities
available, about three out of four respondents who have
initiated a purchase online are satisfied with their Web
shopping experience, both on the price they eventually
received as well as coverage terms and conditions 每 with a
slightly less enthusiastic response among online shoppers
for workers* comp and commercial auto.
Voice of the small-business insurance consumer Are buyers ready to take the direct sales route?
3
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