About half of the 751 small business owners surveyed by the Deloitte Center for Financial Services said they would be at least somewhat likely to consider buying insurance policies directly from a carrier.
However, while this business model has been successful for auto insurance, the greater complexity of commercial policies and the politics associated with dropping insurance brokers has kept this from becoming a reality. The direct sale of small-business insurance in the US comprises just 1% of the market.
According to a new poll from Deloitte, 83% of small business owners say they are satisfied with their current agent. However, their willingness to part with that agent is still higher than many in the broker channel would like. Close to half of those same survey respondents said they would eliminate an intermediary like an agent or broker in exchange for a relatively small discount. Even more indicated they would be willing to purchase from direct sellers if they were offered risk management advice and other value-added services currently provided by agents.
“If online sellers provide value-added self-services in addition to discounts, there may be a growing risk of disruption and disintermediation unless agents and their carriers respond in kind,” the Deloitte report said.
Even more troubling is the number of survey respondents who were less than enthusiastic about their agents. While they emphasized the importance of customer service in choosing their distribution channel going forward, the majority said that other than peace of mind, they are not being provided with anything more than initial coverage and renewal quotes from their agent. In fact, six out of 10 reported that they receive no other services from their agent over and above shopping for policies.
Of course, the eventual rise of direct selling for small business policies is by no means assured, but the report should be a signal to agents to stay on their toes.
“It is unlikely that agents and brokers will be significantly disintermediated in the smallbusiness market any time soon,” Deloitte said. “However, additional direct initiatives will likely be launched, requiring a response by their legacy agency competitors.”