To say that Michael Reilly has experience working with small businesses to get the right coverage is a bit of an exaggeration.
For 23 years he has been with Accenture where he is now the Managing Director. Over that time, he has seen the small business market go through some significant changes.
The main message we got from him during our recent podcast: agencies need to prepare for some paradigm-shifting turbulence coming up. There are also plenty of overlooked opportunities right now, of which the savvy agent can take advantage.
Many small businesses use multiple agencies
When small business owners want to insure a large purchase, often the complication of the policy they buy causes them to doubt they have sufficient coverage.
This is not something that just happens every now and then. In fact, according to Michael, a significant portion of the market is looking for secondary coverage.
“30% of small businesses were trying to go into the market with more than one agent hoping to get the right coverage”.
When an owner goes to another agent trying to get fully covered it is an indicator that the original agent has not communicated the benefits of the policy clearly.
“We realized how frustrated and how confused the customers are about buying small business insurance. They get handed a 150-paged policy that’s all legal jargon. After they read three pages, they have no idea what it actually says. That’s not sufficient.”
This alone could be one of the highest potential opportunities for agents to increase their aggregate policy value.
Agencies must make a significant investment in improving communication with their clients and incoming prospects. This will drastically increase the chance that the client will purchase the right amount of insurance to cover their business fully.
Small business owners are buying insurance online
In the past, it was primarily consumer insurance that was suffering from the invasion of cheap, simple, online insurance solutions. But in recent years, the digital revolution has expanded to include the small business line world as well.
“60% of small business owners are prepared to purchase their insurance online. Research indicates that this comes from some level of frustration that they feel with the agent community. They feel they are not delivering anything of value other than shopping for the policy.”
Experienced independent agents know that this simply isn’t true. The value that more personalized service can provide a customer can be invaluable over the lifespan of a policy; especially in the event of a catastrophe that tests the limit of the coverage.
But this value can often be difficult for the customer to understand. The effort to communicate the benefits of independent service takes time, consistency, and high-quality communications.
This movement to simplified online coverage can leave many small business owners exposed. In fact, a great deal of the market might not understand just how short their insurance policies are failing them.
“70% of small commercial it’s still underinsured. Some of that means people never bought insurance. Some of that is people who have insurance but don’t necessarily have the full or right insurance for them.”
The demographics of small business owners are changing
As we enter the third decade of the millennium, it is worth noting that the Millenials we all thought of as youth are now entering positions of authority in every industry. Baby Boomers are moving into retirement, and Generation X and Millennials are taking the reigns.
“More than 60% of small businesses in the US will be owned by millennials and generation Xers by 2020.”
As these generations begin to represent a more significant portion of the owners of small businesses, agents must recognize they are bringing certain expectations with them. It is important to remember that they have grown up with all things being offered to them digitally.
This creates a unique challenge for independent agents accustomed to more traditional forms of business. Despite the dangers of large impersonal digital solutions, agents will still need to find a way to substitute analog communication for digital or risk losing this vital audience.
“Where they seek sources of information is different. They still want their networks. They still want friends. They still want those different elements but they also rely on digital services far more. They are used to completing digital transactions far more and so you start to see that play out into this market as well.”
It is time to step up, strap in, and change with the times
Changing times is no reason to panic. In fact, these new developments in markets, technology, and demographics provide fantastic opportunities that, with the right focus, can drastically improve an agency’s business.
All it takes is an open mind, a willing attitude, and the right tools. That’s where Agency Revolution comes in. We provide agents with state-of-the-art digital tools to automate their communications and deepen their client relationships. If you are interested in learning how we can help you change with the times, click here.