The role of the small business insurance broker is under assault as the rise of InsurTech disrupts the traditional insurance value chain. With more than $5 billion invested in InsurTech startups since 2015 and more than 60 percent related to distribution, according to CB Insights (“Quarterly InsurTech Briefing Q2 2017,” CB Insights/Willis Towers Watson, July 2017), brokers need to adapt to a transforming industry. Carriers need to help, starting by simplifying the underwriting process and giving brokers the tools to succeed.

Executive Summary

Carriers need to do more to simplify their underwriting processes and give brokers self-service tools to succeed in the small business market, believes CapSpecialty executive Adam Sills. Although InsurTechs seek to "cut out the middleman" in the segment, customers truly benefit from brokers' understanding of their businesses and the unique coverage grants they don't have time to learn about on their own.

To date, a majority of these InsurTech players entering the market are direct-to-consumer, focused primarily on personal lines products. Many of these are looking to “cut out the middleman” with the intent of disintermediating existing channels by offering instant policies to small individual and commercial insureds. Most of the new entrants have focused on the simplest products. Renters insurance or health insurance are slot-rated products where a clever marketing spin can drive market penetration. These products are so standardized that the presence of an adviser may not make sense if the needs of the buyer are at a bare minimum.

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