April 26, 2021
Way Beyond Comparative Raters
Distribution in commercial lines is in play. Companies are rethinking strategies to reach preferred segments and drive more profitable business.
Commercial lines insurers have many options for distribution partners. The world of intermediaries is continuing to expand, with many new platforms to connect distributors to carriers. We are frequently being asked by insurers how many distribution platform partners an insurer should have and how to identify the ones that best align to their strategies. Often, the questions are framed as comparative raters, especially because the concept of comparative rating migrated from personal lines over into commercial. Most of the intermediary platforms provide rate-quote-bind capabilities along with the capability to compare rates and coverages across multiple carriers. But many of the platforms provide a richer set of capabilities to improve the entire process for the benefit of agencies, brokers, MGAs, carriers and others in the ecosystem.
In total, we count around 30 companies that focus on simple or moderate commercial lines risk, ranging from small commercial to mid/market and specialty lines. Prominent names include CoverHound, CoverWallet, Bold Penguin, Tarmika and Talage, plus incumbents like IVANS, Bolt and Appulate. (The world of placement and trading platforms for very complex risk is a whole different animal, but there are also a number of new players in that space.)
SMA’s recent research report, “Commercial Lines Distribution Platforms: Rapidly Evolving Options for Carriers,” provides insights into the growing stable of distribution platforms with significant capabilities for commercial lines. A companion report profiling each of the companies identified in this report is scheduled for release in May.
Let me now answer two of the most common questions we have been getting from insurers working on distribution strategies:
Question #1. How many distribution platform partners should we connect to?
Answer #1. It depends, but the answer is probably not just one.
Question #2. How should we select the best partners?
Answer #2. This should be based on a number of factors, including the lines covered, robustness of specific functional capabilities, platforms your agents are already connected to and the business model, among other factors.
See also: The Digital Journey in Commercial Lines
Of course, there are many other considerations related to distribution strategies. Should we pursue a digital brand or direct strategy to move into new markets? Or even to compete in markets where we already have a presence? What enhanced tech capabilities should we be providing to our distributor community to attract more submissions that match our appetite? What are the best approaches to managing channel conflict? What are the best options to enable a true omni-channel environment?
The list could go on, but the main point is that distribution strategies in commercial lines are in play. Many companies are updating or rethinking their strategies to reach preferred segments and drive more profitable business.