Small commercial lines insurance alert: turbulence ahead

Big changes are ahead of us. If you have any small commercial lines business, it may have been smooth sailing… until now. Willis Towers Watson Securities and CB Insights recently forecast that up to 25% of total small business could be digitally underwritten by 2020. This huge $100 billion market hasn’t had a single dominant player – no carrier owns more than 4% market share. 

But, as insurtech and competitive forces sweep the market, you can expect everything to change. Our guest, Michael Reilly, ‘wrote the report’ on the turbulence in the small commercial market – and he shares his insights and success strategies with our host Michael Jans, including:

  • Michael Reilly’s 3 strategies to win the small business insurance market.
  • What major carriers have been doing behind the scenes – and why you can expect to see a fast and dramatic battle play out on the international insurance stage.
  • The dark cloud of negative emotions that small business owners have about their insurance… and the one big thing agents can do to turn that around.

Mr. Reilly and Accenture have released one of the ground-breaking reports of the year. This is a can’t-miss interview. 

What are other agents & brokers doing to thrive? What are the biggest trends affecting the retail insurance agent & broker? What are the most important strategies and tactics you need to grow faster? Find out here in the Connected Insurance Podcast, where our hosts discuss the biggest issues affecting the independent insurance agent & broker with the industry’s leading figures.


Jans: Now without further ado, it’s a great pleasure to introduce you to this conversation with Michael Riley, Managing Director at Accenture’s Insurance Practice. Michael, thank you so much for joining us today. How are you?

Reilly: Doing very well. Happy to be here.

Jans: I’m delighted about this conversation because I think your research is really, really important to my audience. We’re going to have some fun with this one. Before we talk about your findings, your conclusions, your research, your analysis, if you could give us a little thumbnail sketch, Michael, of perhaps what you’ve done that has led up to where we are today. A little bit about your background and who you are.

Reilly: Sure. My name is Michael Riley out of Accenture. I actually started my career in insurance at a company called General Accident, which then later got absorbed into Ace and later on Chub, but almost 22, 23 years ago, I joined Accenture as part of the financial services insurance practice. Over those last 20 plus years, I worked almost exclusively, especially with a special focus on commercial insurance, small business insurance.

I’ve done work in these areas in the US, Europe, Asia Pacific, and I lead the small business practice for Accenture. That means the development of offering, leading our research and essentially helping to drive our position in the space.

Jans: Got it. All right. You recently delivered a report to the industry on kind of the state of the small business insurance world and you had some conclusions and recommendations. That’s what I would love to dive into. Let’s start. Big Picture. I think where you start with your report I think that the small business community feels that this industry is perhaps not serving it terribly well. Am I right about that?

Reilly: No, you’re absolutely right about that. We went into the reporter, we went into the analysis with some ideas of that, but the more that we got under it, we realized how frustrated and how confused the customers are about buying small businesses insurance.

Jans: Indeed. Michael, I think the last time you and I talked I mentioned to you that there was another advisory firm that said that 60% of small business owners are prepared to purchase their insurance online and to some extent that the research seem to indicate that comes from some level of frustration that they feel that the agent community is not delivering anything of value other than shopping for the policy.

Now, obviously, I’m representing the concerns and sentiments of the agent community, but it seems to be in general, there’s some disconnect or frustration between small businesses and insurance, what’s going on?

Reilly: I think you can come at it from a number of different angles. First of all, I think individuals who are first moving into small business, are finding a hard time finding the right agent to get to the right connection point to find out if I’m insured, so they try to do Google searches, they go to maybe their personalized agent who may not necessarily have the right information and they try to search different things.

What they see that the industry is doing is trying to put them in the boxes, put them in different pieces, to sell them a quick policy and get them on their way in a lot of ways. In some cases, that’s good, sufficient or whatever else, but a lot of times, it’s leaving them still with gaps or things that are not covered. When you go back and look at studies that show that 70% of small commercial it’s still underinsured, some of that means people never bought insurance, but some of that is people who have insurance but don’t necessarily have the full or right insurance for them.

There’s an underlying uncertainty where the small business owners notice and as we start to interview them and spend time with them in their businesses and in their pieces, kind of talking to them and understand. We understood that the frustration is not just in the search, the frustration is in jargon, the frustration is after they bought the policy-

Jans: [laughs]

Reilly: -most of them aren’t sure whether it’s really going to cover their needs.

Jans: Okay. Am I right, that there’s also frustration in the purchasing process itself?

Reilly: Oh, I agree.

Jans: The gathering of data, the fulfillment of the applications, the back and forth phone calls and so on and so forth. Sorry, I have a question about this. Clearly, this is an industry that wants to take care of its customers. What is it, what do you think is going on with legacy systems or inefficiencies in the infrastructure, why is it that there’s so much dissatisfaction in that community with our industry?

Reilly: I think the reality is that the small business market has evolved and our product solutions to that market have not been able to keep pace. The traditional Bop we sell is back from the 1970s.

Jans: Indeed, yes.

Reilly: In the 1970s it met those businesses’ needs but today businesses are digital. They need cyber coverage. Now, they’re shipping goods all over the place, in the Marine those element income go into play. They have different exposures and a liability than they ever had before. Employment practices, lawsuits are up. Cyber events are up.

There’s all these different things that are hitting them. The way the carriers have responded is well, they have one policy, then they create another policy, then create another policy and they create another policy which collectively has all the right coverage which small business needs but to navigate that, to try to find all those coverages, I think we saw about 30% of small businesses were trying to go into the market with more than one agent hoping to get the right coverage.

Almost all of them. You see them trying different ways to make sure they’re covered, to make sure they can sleep at night with this but a lot of them are still uncertain but frankly, they will be uncertain.

Jans: Let me ask you. Well, do you think that there’s another problem as well that perhaps the agency force is not sufficiently incentivized or compensated to provide the kind of advice and analysis that a small business needs today?

Reilly: Whether it’s an incentive or whether it’s providing the right support and advice to them, only because the reality is this is a complex purchase. As a complex purchase that doesn’t necessarily have a lot of premium behind it, especially when you start to talk about the additional coverage. So the base Bop or the base package may be a decent sale, but when you’re doing a small piece for umbrellas, a small piece for here, a small piece there, the small additions aren’t just necessarily generating a lot of extra income for the agent.

What you need is different solutions. If the agent is going to be the medium to do the sale, to make sure that the agent can quickly assess the customers’ needs correctly and holistically and then have a fast way to help them then complete that sale.

Jans: Okay. We’re going to circle back to that one.


Reilly: There’s a lot to uncircle on that one.

Jans: That’s a big one. I’m not even sure- you probably didn’t know I was going to throw that one at you, but I am here as an agent advocate and I want to get the best answers I can to them. Before we do that, I want to cover a number of things. One was that you had said in your report that 25% of total small business insurance premiums could be digitally underwritten by 2020. Can you unpack that one a little bit for us?

Reilly: Right. These are the trends that we’re seeing happen across the industry. Where the industry started from the underwriting perspective is once upon a time the underwriters were looking at every single coverage, at every single piece. That has continued to evolve and it continues to evolve in both the Bop and the package, whatever else. Where you see carriers pushing far more automation for large portions of business.

Most carriers today are definitely over 60. Some are getting in the 70s and some are in the 80s low 90%, and so they’re able to handle online completely. Some that have much more rigid appetites, which means they’re much more restrictive about what they write and don’t write are essentially pretty close to 100% but they’re able to essentially close completely on the screen, and depends on the size of business and complexity and things on those lines, but those trends are already going and now with advances in third-party data, more advanced analytical techniques to help assess that data and to make sure you’re getting the right facts about the customer, we’re seeing those numbers go up pretty dramatically.

Jans: Got it. Okay. That is a trend- we are moving in that direction. That’s a fact.

Reilly: Absolutely.

Jans: Okay. Then you also indicated that there’s a significant demographic shift. If I quote from the report, “More than 60% of small businesses in the US will be owned by millennials and generation Xers by 2020,” what’s the implication of that?

Reilly: Well, there’s a couple of implications with respect to that. First of all, those groups are growing. Those groups are getting older. Those groups are commanding the money. Those groups are more likely to run side businesses and take some of those risks. You are seeing a lot of them start small businesses and not being afraid to start small businesses. Not being as tied to long-term corporate jobs and willing to take a little bit more risk on their own but how they engage with the world is different.

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 and are used to completing digital transactions far more and so you start to see that play out into this market as well.

Jans: Got it. Where do you think that leaves the agency force? Are they left out of that equation or do you see a role for them in that?

Reilly: I think if we come back around to the overall frustration, and then the different ways to solve the frustration, there are areas where the agents can play a big role. Where the agents can do that. What customers need is education. What customers need is good evaluation of what they want. What customers need is the right solutions to actually cover their need.

Agents can do that in a lot of different ways. They can do that through– before we’ve talked about plays they can make for specific affinity groups. Focus on one area and build support service more around that. They can develop small tools to help the customer self assess a little bit to help make it go in or they can more carefully partner with carriers who’re going to provide those added advantages and look for them.

Jans: In your report, you’d identified four areas that small business find as points of frustration with this industry. One that it’s like the search process, the application process, the purchasing process is time-consuming, it is complex and difficult for them to understand. There is a skepticism and some lack of trust and that the industry perhaps is not as flexible as the small business needs them to be.

Reilly: Absolutely.

Jans: When you look at those four frustrations, what does that say to us as an industry?

Reilly: Well, to me if you take a step back and think of all the buying experiences you have in your life. If you’re an agent, you buy things on behalf of the business, you also buy things on behalf of your personal.

I don’t know of anywhere else where you’re buying a product, where you’re uncertain about it at the beginning. You’re confused about the jargon, what it means and how it works all the way through the middle and you go out the door at the other end and are still not certain as to whether what you bought is actually going to meet all of your needs. [crosstalk]

Jans: [laughs] You just described the customer journey from hell, right? I enter it uncertain that’s not too uncommon. Whatever, buying something new, buying a new piece of technology, uncertain but then to go through confusion and then end up with still being uncertain that’s not a good experience.

Reilly: Agreed and look, it’s not that it’s not a lot of work to try to fix in different ways and different elements but right now it’s one of the worst experiences that is still left out there despite even some of the digital solutions, different pieces that try to come out at different ways. Collectively, it’s one of the worst experience still left out there today.

Jans: All right, so as an industry, what do we need to do to make this a better experience? Then I want to dive into it from an agent or the retail perspective. What do we need to do? As an industry maybe to some extent we’ve taken it for granted. We know that they need insurance but now we’re clearly in a very competitive environment. I suppose there are two ways to look at this. What do we need to do as an industry but particularly, competitors, what do competitors need to do to win this marketplace?

Reilly: Yes. Winning this marketplace is definitely very interesting right now. We’ve been seeing a lot of the carriers and the e-brokers and whatever else gear up over the last couple of years, and now we’re seeing the ad spend increase and the focus of that increase. The battle is brewing and the battle is coming. Look, we saw this in personal lines before. In personal lines where they had built their underlying capabilities and whatever else and then the ad spike started.

The end result is we saw about anywhere between 20% to 30% of the market get unsettled and resettled with different carriers or different placements and different elements. Some of that end up going direct, but some of that just moving around where that market had been studied for a long time. Small businesses had the same 8 to 10 players that have their same 5% to 6% of the market who have been relatively the same for a while. You’re starting to see us in that same spot, where this unsettling is going to begin.

The winners are going to be similar to what we saw before. The winners are going to be the ones who can create a compelling experience. A compelling experience doesn’t mean just fast, doesn’t mean just easy. It has to be a compelling experience that fits what the small business needs. Which is to be educated and to be confident that what they’re buying will protect what they love. Where their family members are working, where their family relies on as their source of income and livelihood, like this is something precious to them.

When we design the experience, we have to recognize that and have them have trust and confidence at the end that they’ve made a good decision for that investment.

Jans: All right. [laughs] You’re throwing so much at me. I can hardly keep up. Okay. Every now and then I got to interrupt you because you made some really good points. Going back a couple of minutes, you said the battle is coming. You said that for a couple of years, carriers have been gearing up. What does that mean? What are they doing behind the scenes that we may not see?

Reilly: What we’ve seen is investments and their capability. We talked before about the ability to do more straight-through processing. We’ve seen investments there, we’ve seen investments in some of their products. We’ve seen investments in some of their portal capabilities, either to the agent, to the e-brokers or direct to themselves.

They’ve got all these capabilities so they can try to underwrite faster and more efficiently. Now they don’t need investments, they want return on those investments. Now they’re starting to go try to drive the marketing side of it.

Jans: For example, last night I picked up about an hour of TV, and I saw two ads for small business insurance. Are you anticipating that that ad spend is going to gear up?

Reilly: Yes.

Jans: Okay. Got it.

Reilly: I’ve seen the same thing. August was a very hot month for a number of– A large– More than I’ve ever seen before. More new carriers launched something into the small business space in the last month than I think I’ve seen in the last 10 years.

Jans: In ad spend?

Reilly: In ad spend.

Jans: All right. Last night, I saw the Yolk talking. It’s like Mr. Ed– [chuckles] I may not make friends on that one. Ad spending is going to go up now. Let’s take the point you made a moment ago, that carriers have been investing in the infrastructure. If you could roll that forward a few years, to the imaginary point where they’ve hit Nirvana. It’s like, “Okay, this is the way it should be.”

What does that look like? When the problem is solved and small business owners are no longer frustrated, they’re happy and they’re bragging to their friends about the great insurance experience that they had. What does that look like?

Reilly: What’s interesting here is it depends on carriers making the right decision. It depends on what it should look like versus what it could look like. What will definitely happen is, the carriers will continue to invest in making small commercial more efficient.

They’re going to invest in things like third party data, more advanced analytics, cleaner, slicker portals, so they can reduce the number of questions, make the service experience easier. They’re going to do all of those elements.

The question is whether they do that to sell products or do they do that in a way to help solve the small commercial business owners’ actual needs? That’s the change in focus. When they started on this build, what they tried to do is just make things faster and easier for their agents, but they didn’t consider that small business had these other needs and other gaps and these different other products and whatever else.

They keep selling them all as manufacturers. We have this one, we have this one, we have this one and not as solutions to small business owners that are holistic needs. The only one that we see doing differently is Berkshire’s THREE Insurance. It’s taken a completely different path.

Jans: Yes, we did talk about that. We talked about THREE Insurance and ironically, literally after that conversation within half an hour, I saw something show up in my reader, about THREE Insurance. What’s happening there?

Reilly: As we come back around, we talked about there’s a couple of different strategies to help the customer here. THREE talk was one of the most innovative strategies that we’ve seen, because they took a product approach to it. Remember, one of the frustrations that small commercial business owners have is they have to– especially as an established small business, they have to have all these different coverages to make sure that they’re fully covered. That’s usually where they may have some holes and stuff.

It’s not that the individual products are bad, it’s that they don’t necessarily have all the right products that they need. What Berkshire did with the THREE product is something completely different. They came out as rather than have all these individual little products that have different coverages and whatever else, they built a brand new product. Which is their THREE product. Which is meant for most small businesses, cover all of the things that a small business would need.

The idea is if you buy that policy, you don’t have to worry about gaps or holes or whatever else. You have the full coverage that you need in one new, simple, innovative product. They’re the first one that have taken a comprehensive product view into the marketplace. Especially, one that is more targeted at the established small businesses. We’re seeing that as a very interesting play to watch out, and then compare that to some of the other players that are there.

Jans: How do they gather sufficient data to price that product?

Reilly: Right now, they’re currently selling it direct. They go through gathering underwriting questions online, the same as most of the other direct portals. They think they have the right questions to get the information they need to price it effectively.

Jans: Okay, got it. They’re getting the data from the insured, they’re not gathering it from public or proprietary data sources?

Reilly: They may be doing some of that and supplements, I don’t necessarily know. They’re definitely gathering it from the customer judging by their product.

Jans: Do you see the industry moving more in that direction?

Reilly: We’ve seen the industry respond in some ways. One of the product changes we’re starting to see is that a lot of the new launches into small commercial are going with a commercial package coverage. Which has a little bit more flexibility to add additional coverages than the traditional Bop. We haven’t seen anybody try to do the whole thing, because the whole thing is such a shift. That most carriers aren’t willing to take that leap.

Jans: Again, to go back to something else you said, that the winner will create a compelling customer experience. I think you said that, you mentioned peace of mind or that the consumer wants confidence. Which is interesting, because it’s– Now we’re talking about an emotional or an experiential value, not the product itself. One thing you talked about was, the purchasing process needs to be more sensitive, it needs to be faster and more efficient. You said that’s not enough. It needs to be something beyond that. What are the things beyond speed and efficiency that the small business consumer wants?

Reilly: Especially with the small– You want confidence in anything you buy. Whether you buy a car, a large piece of equipment, or whatever else, you want to feel good about that purchase. Whether that was the correct decision and that, “I am now covered in this, essentially large investment that I’m making.” Insurance is a large investment. At the end of that get handed a 150-paged policy that’s all legal jargon, that after I read three pages, I have no idea what it actually says. As the only solution for what happens. That’s not sufficient.

Instead, if I can educate them of, “Look, here’s where you’re covered completely, here are the things you can do, here’s where we’re here to help. Here’s the things to let us know if you’re making–” To make that onboarding similar to the experiences you get in other areas of the market. That’s part of that buying process. That’s something that agents can do. It’s something that carriers definitely need to do.

Jans: In the ideal world, what do you think happens after the point of purchase before the point of renewal? We’ve got 10 or 11 months of what is frequently dead air. What do you think needs to happen then?

Reilly: Well, it’s dead air because the carrier moves on. They’re treating us as a trend as opposed to a relationship. Sometimes the agents are too because the premium– Not all agents, there are some very good agents that continue to reach out. The reality is the small business is trying to grow their business. They’re trying to do different things, they’re inventing new side hustles, they’re inventing new elements.

Some of those things are creating risk and some of those things are creating exposure that they may not have. A better way is finding ways to continue to engage, you remind them of things they can do like cyber issues are way up. Remind them– This is where you see partnerships being created or alliances being created or other products start to being offered to small commercials, so offering a full ecosystem rather than just the insurance but trying to help them protect their business in more ways than that.

Jans: Maybe this is a bit of a softball question or a leading question, but it has always struck me that the more an agent has a specialty where they can develop a high level of expertise in mastery in a class or niche of business. The more that they can do that, the more they can deliver profound value to their customer base.

Reilly: Yes. What I would say about that is– We talked about those three strategies we see playing out to help get over that frustration. That affinity or that specialization is one of the strategies that’s being most successful now. If you can make sure that you have all the right products, all the right elements in order to help whatever it is. A restaurant, a food truck whatever, you are in a much better spot to, in fact, to better serve your customers, but also to be more successful in this coming marketplace.

Jans: Did you say three strategies that you see playing out here?

Reilly: Yes.

Jans: Well, that’s one. [laughs]

Reilly: Well, that’s one. The product strategy from THREE Insurance would be the second one and the third one we see is these carriers and even some of the e-brokers and some of the agents would arouse, trying to find better ways to help the customer. You self identify yourself select the products they need to make sure that they’re fully covered.

Jans: Okay, got it. That’s an ongoing educational process?

Reilly: Yes.

Jans: Exposing them, teaching them. In regards to number two the product solution, when you refer to three, the two things that come to my mind are that it is comprehensive because it’s supposed to cover everything and simple.

Reilly: Yes.

Jans: Got it. All right.

Reilly: It’s written in plain language which is another very different thing than we see from a traditional insurance policy.

Jans: Well, I think somewhere in your research, you said that the small business consumer finds that the insurance industry or the insurance process is “not fun”. Well, gosh, [laughs] shocking. They’ve never been doing insurance conference so they were an awful lot of fun.

There are few things here that do strike me as being– and to some extent, I realized your subscribers are carriers, but you’re speaking to the industry in general. When you talk about the need for transparency and offering educational content, it seems that there’s a lot there that can be executed at the agency level not just at the carrier level.

In fact, it could be executed perhaps more effectively at the agency level. Let me give you an example and I’m pulling this out of your work. Number one was, use online videos to educate small business owners on coverage details, the claims experience, and basic insurance information. Who can’t do that? Nobody. I mean if you have a Smartphone and enough intelligence and expertise to be a good insurance agent, you can deliver that and people really do respond well. I mean it would seem to me boom. That’s an easy one.

Another one that you mentioned and I think this probably has to do with overcoming the trust barrier and giving people that sense of confidence. This was leveraged customer testimonials to communicate the benefits of Commercial Insurance. Who can’t do that?

Reilly: Agreed. Can you go a step further there and leverage customer data and say, “Look, small businesses that were like you. Here’re some of the things they bought, here are some of the extra things they consider,” and explain it that way. That helps create confidence in the buying process.

Jans: Got it. Then I think another recommendation you made was here, small businesses usually appoint attorneys and accountants well before they purchase Commercial Insurance. Partnering with them, their legal and accounting practices can help insurers gain referrals, could certainly help agents gain referrals and build credibility with small commercial customers, right?

Reilly: Agreed.

Jans: Like I had said to you before the podcast, you talk like a marketing guy. For a high-level thinker, these are very practical tactical applications that anybody can execute on.

Reilly: That’s part of our goal. Well, we help carriers, we help some of the large agents and brokers as well, but they have to be real solutions. They have to have the solutions that will actually move the market and this is what the market need. We know this stuff because we actually went to the small business owner. We spent time with the small businesses, we had them in workshops. This is very personalized close in research and this is what they’re telling us.

Jans: Tell us a little bit about the methodology of the research?

Reilly: We’ve actually used multiple steps and actually quite frankly our research continues. We’ve gone back and forth with– We started with some initial surveys, then we actually went into deep interviews. Some of those interviews were conducted online through web and whatever else and to how we’re doing here. Some of those were actually conducted in person actually in the client site.

Then we brought small groups and small business actually into our offices for workshops where we explored some of these concepts in high detail and high elements. Then, later on, we have gone further and check that data as we’ve gone on. We’ve done more surveys or we’ve done analysis or we have feedback from certain projects of what’s working and what’s not working that is continuing to help form our opinions.

Jans: Was there anything that the small business owner said that was a surprise to you?

Reilly: A number of things actually surprised us.

Jans: Oh, really? Okay. I thought that might be a lot of confirmation but I’m curious. What are the surprises?

Reilly: No, we got surprised in a couple of different ways. Number one was it was incredibly surprising how many of them had more than one insurance agent.

Jans: That’s because they just weren’t satisfied with the first one who was serving them?

Reilly: When we talked to them, essentially what they were saying is we weren’t completely certain that they fully understood our business and so they ended up with a second one. Sometimes was for workers comps because they found a work comp policy that was through their trade association or whatever else. Or sometimes it was for event insurance or something else.

They found a need to look in a second place. That was highly surprising and then we knew there was frustration out there. The level of frustration was surprising and the passion behind some of the frustration was surprising.

Jans: You also talked about serving the customer throughout their life cycle.

Reilly: Yes.

Jans: Presumably you’re saying we fall short. We’re not doing that terribly well.

Reilly: No, I think we’ve been driven by the carrier side and some ways, the broker side has been driven by efficiency so much. That I need to cut expenses, I need to make this faster, I need to make this easier. We’ve lost the fact that small businesses are not in stone that they are constantly changing, they’re constantly altering.

A way to keep up with them as they grow from that sole proprietor to their first two employees to the first time they cross the work crops threshold, the first time they have real assets to multistate owners– We’re not necessarily good at nurturing all the way through those different journeys with them to understand their insurance needs.

Jans: How do you think the industry should do that better?

Reilly: I think its two pieces, number one is if we can improve the upfront experience to do more of this education, to do more of this consultation, to so more of this- making sure that the insurance is right for them. Being able to do that and renew or being able to do that periodically allows us to continue to grow and evolve with them. We don’t want to be treated as, “Oh, we assumed they were the same as they were last year and we just send out the renewal and forget about them.”

I think the other piece is quite frankly, there’s a lot more data that the companies have changed and we have to use those data as an inflection points to recognize when a new discussion is worthwhile or awesome.

Jans: Got it. For the agent of today, it’s a fast-changing world and I think some times it’s difficult to know which trends and forces do we need to pay attention to which ones could conceivably hurt us and which ones might lift us up. When we look at the small business world, which for a lot of agents it’s a substantial part of their book of business.

Of course, it’s easy to look at personal lines and say, “Well, there are a lot of threats there.” Certainly, there are. When we look at small commercial lines for the retail agent, if you’re going to advise them, “This is what you need to do to be one of the winners,” what do you think that is?

Reilly: To me, it’s in some ways they have the same– They’re not going to be able to change the product. They can change who they partner with, but they’re not going to be able to change their product. What they can do is find ways to eliminate that frustration, to be more of that partner to the customer.

Good agents they do that already and you can do that from an affinity perspective to lots of specialization perspective or you can do that if you have more capability or what the law says, but designing that experience because recognize we know you’re still not going to get, it’s still the small end of the market, there isn’t necessarily a ton of commissioner, but defining repeatable processes that help the customer to get educated to come over this process and stay informed. There are definitely opportunities there for carriers to carve out their space in this emerging market.

Jans: Yes. Clearly, on an individual basis, there’s not that much commission, but in an aggregate basis, for example, I may have hundreds or thousands of small commercial business owners that there’s a significant amount of commission. I think what you’re saying is that the challenge for the retail agent is to take the time to step back and design a customer experience that yes, it’s a generality. We’ve got to create an infrastructure or a highway that a lot of our customers drive on, but we want to create an experience that’s satisfying for them.

Reilly: Quite frankly, I think the other thing, agents control who they partner with, agents control which carriers they connect to. I actually think agents should be part of a voice on this on behalf of their customers’ goals. Carriers are not giving us the right tools and they can speak with where their agency partners as to, “Give me the right tools, give me the right education, give me the things that my customers really need that’s going to help me stay connected to them or I’m moving on.”

I think they can also demand far more from their products.

Jans: Big question, answer this however you want to. Are you optimistic about the agent community? Are you optimistic about the role that the agency plays in distribution?

Reilly: When you have a very good agent who understands the small commercial businesses’ needs and can work to help them get those needs, that is a very tough thing to unseat. If you are building trust for that building and the customer is leaving with full confidence that they are completely covered and you are helping them to protect what is their most critical asset in a way that they are fully covered. That’s a very strong position that is not easy to unseat and definitely has potential.

The trouble is if your agency isn’t there, if your customers are still potentially leaving with gaps in their insurance that they don’t know about or holes that they’re not sure about or that you’re only touching once every couple of years with- or once a year with renewals and whatever else. You’re at risk. The market is unsettling right now and those things are going to become exposed.

Jans: I’m going to try to feed this back to you and this is my interpretation. I might be changing it but I think what you’re suggesting is a merger of two different things. Number one, clearly expertise matters. Yes?

Reilly: Yes.

Jans: I have to be a good agent, but considering the relatively light commissions that are available for my small business clients, there’s only so much personal reaching out, so I need to be one, a good agent, but also use available and emerging technologies and other perhaps other approaches to maintain some form of ongoing customer experience and an ongoing sense of customer relationship to provide the education perhaps through videos like you had talked about and other forms of contemporary media and tend to deliver that peace of mind, which is the emotional element that is like I think you said is the magic formula. Combination of both of those. In other words, they have to be good agents and good business people.

Reilly: Yes. On the second one on the experience side, I think you need to think through your experience beginning to end. When the customer first comes in the door what can they self assess, what can they get educated with, what can they do to help you then advise them more quick because you don’t want to spend– you don’t have the time to spend hours with them with the commission you’re getting paid.

Quite frankly, what can I push on the customer a little bit, but in a way that actually helps the customer feel good about the experience they’re learning and they’re helping you learn about them quickly? Then how do I run the quoting process more efficiently? Then, you’re right, how do I do that onboarding and do I do that ongoing contact in an industrial way?

Because look, you’re an agency, you’re going to have to do it more effectively, so those business elements come through as well.

Jans: Got It. All right. Michael, this has been a fascinating conversation and I think the quality of your research has been first class. I appreciate you taking the time to share this with us. Thank you so much. Before we go, anything else that you want to say to the agent community?

Reilly: No. Look, you’re the advocate to the end customer and you can do a lot with that advocacy both ways in trying to help the carriers address their needs and trying to help make sure that, quite frankly, your customers are effectively and completely covered.

The problem we have today isn’t just the frustration, it’s the confusion. The reality is today we have far too many small business owners who even have some coverage but don’t necessarily have the right coverage for them and that’s something as an industry we need to address.

Jans: That would come back to hurt us. Michael, this has been a tremendous conversation. I really,really appreciate you taking the time to share with us.

Reilly: I’m happy to, enjoyed it as well.

Jans: Indeed.

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