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 – 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.
The Deloitte Center for Financial Services conducted a survey of more than 750 small-businesses in March 2013 from a variety of industries and company sizes to understand if there is a potential market for carriers looking to sell direct to consumers over the Internet. The survey also looked into which lines of insurance might be most attractive to online prospects, the premium discount expected by those likely to buy online, and the factors discouraging some small-businesses from purchasing direct over the Internet.
The survey found that nearly half of the respondents are at least somewhat likely, including nearly one-in-five who said they would be very likely 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.
And so it seems that carriers assuming an agent will always need to be part of the small-business insurance transaction should perhaps reconsider that value proposition. Those who ignore the potential of direct sales might risk losing a chunk of this increasingly commoditized customer segment to more innovative competitors. However, there are lessons to be learned from the potential for direct sales even for carriers uncertain whether to add that channel to their distribution mix, or determined not to sell that way.