September 5, 2019
Winning in Small Commercial Lines
Many are rushing into the space or redoubling their efforts and focusing on small commercial, so it is hyper-competitive.
Many commercial lines insurers recognize that there are great opportunities for growth in the small commercial segment. There is no question that the segment is hot and that the potential is there for increased business. So, many are rushing into the space or redoubling their efforts and focusing on small commercial. Thus, it is hyper-competitive, and success is not guaranteed. This raises the question, “What does it take to win in the small commercial segment?” A new SMA research report, Ten Guidelines for Success in the Small Commercial Market, answers this question.
Senior leaders intent on small commercial face many questions. Are our existing distribution channel partners adequate to support our growth? Should we establish a new digital brand? Do new insurtech distribution firms present good partnership options? Do we need to modernize our products by adding new coverages? How can we simplify the submission and underwriting processes? The list of questions could go on.
To develop a winning strategy that can be effectively operationalized, insurers should consider the 10 guidelines in the SMA report. These guidelines can serve as a type of filter or way to organize and address the various questions that arise in the development of a new or enhanced strategy for small commercial. Five of the guidelines are aimed at framing the strategy, while the other five are meant to direct the execution elements. Excerpts from each type of guideline are:
Strategic Approach: Take an outside-in approach. Internal insights and agent input are still important, but the outside-in approach considers customers first: their needs, their pain points and their preferences for interaction. The very first task in taking the outside-in approach is to be absolutely clear on who the customer is. Is it the agent? The policyholder? Or, are they both considered customers?
Execution Elements: World-class data and analytics. The strategies and operations for small commercial must be data-driven. This demands a sophisticated platform for business intelligence and advanced analytics. One of the top areas of focus today for small commercial is improved data pre-fill and data augmentation.
See also: Emerging Tech in Commercial Lines
Winning in this market is not easy. Big players are devoting huge dollars to capture more market share. New entrants such as insurtechs are bringing innovative, customer-focused approaches that are appealing to small business owners. Leaders are leveraging analytics to understand how to segment more effectively. And all are looking at the vital role of technology to create a competitive advantage. It is a big and growing market. And the right formula and focus can make a winner out of any insurer willing to innovate and stay the course.