The debate over whether or not commercial insurers should follow their personal lines brethren and embrace online sales has heated up recently. I&T reported earlier this year about a "sea change" in the product, with observers including Novarica analyst Karlyn Carnahan saying that direct sales and self-service are logical.
But is the time right, or are people trying to force a model that, while very successful on the personal side, still needs some work to be commercially viable? Deloitte recently polled 751 small businesses, with revenues from $100,000 to $20 million, and asked, among other things: Are you ready to take the plunge and buy your business insurance online?
The research found that willingness to buy commercial insurance online and willingness to buy personal lines online are about the same. One in five, the company said, "are actually eager to take the plunge, with another third quite open to the notion." And, insurance companies "who ignore the potential of direct sales might risk losing a chunk of this increasingly commoditized customer segment to more innovative competitors," Deloitte added. Following are some reasons why now is the time to begin investing in direct commercial insurance sales:
1. The Market is Large
Companies that make less than $500,000 in revenue per year make up more than half of all small business, according to U.S. government data. At the same time, Deloitte found that those companies are among the most likely to consider buying commercial insurance directly from the insurer online. Fifty-nine percent of respondents in that segment said they were "very likely" or "somewhat likely" to consider direct purchases, compared to 47% of larger companies. Companies that make less than $100,000 per year -- about 20% of all small businesses -- are "very likely" to consider direct online commercial insurance purchases.