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Are You Neglecting Small BOP Business for the Wrong Reasons?

Many small business owners—especially young entrepreneurs—are starting to seek out only the most convenient, cheapest insurance solutions via online-only platforms. Are these types of prospects worth your time?
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Of the 28 million small businesses in the U.S., more than half are based out of homes, according to recent research from Babson College.

Think about your own peers and colleagues—chances are you know someone who’s freelance writing or designing, providing consulting services or even selling homemade crafts on a peer-to-peer e-commerce website like Etsy.

“We’re seeing more very small business owners emerge,” says Lynn LaGram, assistant vice president of small commercial product at The Hartford. “If you think about a small business owner who’s selling goods online, for example, they certainly have some basic property and liability insurance needs. That’s an opportunity agents maybe haven’t traditionally focused on.”

The problem is that many small business owners—especially young entrepreneurs whose businesses rely heavily on online sales and services—may not know anything about insurance, let alone the independent agency system. As a result, they may seek out only the most convenient, cheapest solutions via online-only platforms.

With new InsurTech disruptors like Insureon and CoverWallet cropping up every day, it’s easier than ever before for small business owners to follow in the footsteps of GEICO customers and start believing the myth that insurance is a commodity when buying simpler coverages like business owners policies.

Whether they address post-sales self-service or point of sale or something in between, online insurance solutions for small businesses “will continue to grow, primarily because small commercial buyers are looking for ease and speed in the transaction,” says Brian Kearney, chief underwriting officer, select accounts at Travelers. “The demographic of the small business owner is changing. We need to meet that small business owner where they interact and communicate, and a lot of that is done online.”

But if a prospect or client is going online for their insurance needs, should you even bother chasing after them? Aren’t they more likely to be a price shopper, a disloyal client, an account that costs more than it’s worth to your business? Why waste your time?

“You may say that’s not the type of insured you’re targeting, but if that pool becomes much bigger, we have to make sure we’re prepared,” points out Dan Gaynor, senior vice president, chief underwriting officer at The Main Street America Group. “If there’s a customer base that’s getting value out of those insurance solutions, what can we do to partner with our independent agents to replicate that?”

“We all need to be concerned about evolving technologies,” Gaynor adds. “There are many disruptors in the p-c marketplace. We have to be as easy as possible to do business with. We have to make sure, as agents and as companies, we have point-of-sale tools and speedy response for self-help—whether it’s for the initial application, or for billing or claims handling.”

Kearney points out that in the age of one-click ordering and two-day shipping, everyone is accustomed to a certain type of purchasing and service experience—even you. “For all of us, it’s about understanding our customers better and their needs better,” he says. “Agents need to be thoughtful about how they may need to change either their sales practices or their service practices to service business the way they would want to be serviced for their own personal needs.”

“A really excellent digital experience is becoming fundamental for a small business owner,” LaGram agrees. “The most important decision for a small business owner will be making the right coverage selection, with an exceptional service and claim experience across the value chain. But our mutual customers are coming to expect a great digital experience.”

Instead of ignoring this demographic, it’s up to both carriers and independent agents to find new ways to provide the level of ease and convenience that drives consumers to seek out online platforms for their insurance solutions—whether that means after-hours service, mobile capabilities, online quoting or self-service portals—and then go the extra mile when it comes to service and education.

“The biggest thing to consider is how can you differentiate yourself on factors other than price?” Gaynor points out. “With BOPs, we’re talking about a pretty homogenous type of risk. Any way you can differentiate yourself in terms of service, ease of doing business and added value—even if it’s added value beyond the traditional client/agent relationship—the better off you are.”

“There’s still a need to educate these buyers. How do we make our product and coverages more understandable and in plain English language? We’re changing a lot of our material to help educate small business owners on their coverage needs,” Kearney agrees.

Currently, research still suggests that while many commercial clients may go online to research their insurance options, most still want to work with an agent when it comes time to take the purchase plunge.

“Small business owners may not understand insurance, but they deeply want the peace of mind of knowing they are fully covered,” LaGram points out. “In many cases, this is their most important financial asset, and the best way for them to achieve that is through a full coverage consultation with an agent—regardless of the size of their business and regardless of their price sensitivity level.”

While an online platform may provide the cheapest price and the fastest experience, “agents are in a unique position in that they can bring and deliver that value to small business owners,” LaGram says. “Some of those other buying experiences a small business owner might go through won’t achieve the same peace of mind that their livelihood is protected.”

But “I think we’re doing ourselves a disservice to say that’s not the kind of customer we want,” Gaynor says. “We have to find ways to serve that customer, then win them over with the value proposition the independent agent can provide.”

Jacquelyn Connelly is IA senior editor.