In a display of activity that could make InsurTechs jealous, some 900-1,000 agents log onto Chubb Marketplace daily.
The Marketplace, a project that is “digitizing the agent experience” in underwriting and selling small business products while also streamlining the process for small business customers, went live in November 2017. Recently, Jim Williamson, Chubb’s division president, North America Small Commercial, Underwriting, spoke with Wells Media’s Andrew Simpson about the signature small business digital platform and the carrier’s digital strategy.
Referencing one of the guiding principles described by Chubb colleague Bennett “BC” Verniero, senior vice president, Business Solution Architecture, Williamson said the “notion of designing this capability for the independent agent and with their participation” has really been central to everything Chubb has done to build and to expand Marketplace since it launched. (See related article, “Chubb Marketplace: Design Principles and Key Features“)
Q: Let’s talk about the evolution of Marketplace coverages that you’ve added over time, how you decide what to add and what’s involved in doing that?
Williamson: The ease of doing business is at the core of our value proposition to our agents. And one element of ease of doing business is the ability to get all the products they need to service their clients in one experience, which is Marketplace. We started with the lines of business that were most relevant for our agents based on their input, which is really the BOP, workers comp, auto, umbrella, things of that nature. But we very quickly expanded that to include our financial lines and management liability products. We added our cyber product early this year. We’ve continued to expand our industry appetite.
So, we have a continuous process of partnering with our agents, understanding their needs, where they want to transact with Chubb in the Marketplace. And then we have a very robust product development agenda that we’re continuously executing and rolling out new things in the Marketplace, [with] multiple major segment expansions [completed in 2018]. We’ve added new products, and we have dozens of additional expansions in the works that will roll out in 2019.
And Marketplace is designed in cutting-edge technology, which allows us to very rapidly respond to the needs of our agents. So, they articulate a need…It’s not like the old model where it takes a year to respond. We are literally doing releases in the Marketplace of new functionality tweaks to the system improvements every month, and in some cases, more than one time per month. So, we’re able to be very responsive to our agents in that way.
Q: That would seem to be critical in this sector. Every one of these niche businesses, whether a florist or repair shop or whatever, probably has some twist that needs to be addressed?
Williamson: Absolutely. And if you think about the challenge that presents to the independent agent, they have to deliver all that complexity and all that expertise. But they have to do it efficiently because these are small customers who aren’t paying very much premium for their product. And I think there’s a tendency to think of small businesses [as] simple and easy, and it is in many ways. But even a small business can have complex risk management needs.
In an example, you mentioned florists. Well, florists are everybody’s favorite example of an easy small business insurance client…Everybody loves the florist as an example on the easy end, and they always use dynamite manufacturers for the tough stuff. But if you think about a florist who’s delivering flowers for a wedding, that florist has a professional liability exposure to the bride and groom on the day of their wedding. If they do a bad job delivering the flowers or they miss a delivery or whatever the case might be, they could be exposed to a florist E&O exposure. You need to have a florist E&O product for them, which we have. And that’s an example of a sublimit or a subcoverage that you’ve got to have to really serve your clients.
Q: We hear from some InsurTechs that today’s products aren’t tailored to the needs of small businesses. Small firms don’t want all this stuff. They want to know, ‘I’ve got a florist policy.’ Well, in effect it sounds like that’s what you do. Maybe it’s language or packaging. But it seems like Marketplace accomplishes this quickly and flexibly.
Williamson: We make it really simple for agents to make sure they’re delivering exactly the right product based on that customers’ needs. When they select the class of business, when they start a new quote, when they go through the quote flow, we don’t leave it to the agent to remember, ‘I have to add florist E&O.’ We’re automatically selecting that coverage for the agent so that they can make sure it gets added to the policy. We also have bundles of very common property and general liability enhancements that the agent can select with one click of the mouse.
We’ve made it really, really simple for them to very quickly configure the right coverage for the right client without including a whole lot of extraneous things that the client doesn’t need and doesn’t want to pay for. So, it’s a fine balance. But we made it simple for the agent to deliver it and to do it efficiently and economically.
Q: I would think agents love this as well from an E&O perspective because they’re prompted to make sure they cover all the important bases and it’s all here in writing, right?
Williamson: E&O is a critical issue. And if you think about, for example, a client, a small business owner goes into an agency, and they might spend $5,000 on the insurance. That agency is going to get less than $1,000 in commission revenue. They certainly don’t want to have then a million-dollar E&O claim happening on that account. So, one of the ways that we factor that into the way we design coverage, for example, is our property and our GL enhancement packages. It really offers the agent a lot of protection against the possibility of that happening because it provides them with a broad basket of supplemental coverages ensuring that the end buyer has all the coverages they might need in the event of a loss. And some of these coverages, it’s not the type of things you think of every day but in the event of a loss could be really important. So, we ensure they’re baked into our core enhancement packages.
Q: How do you incentivize agents to use Marketplace?
Williamson: Well, we really only process our small business activity on the Marketplace, and we offer very competitive commissions to our agents. So, they’re absolutely incented to do business with Chubb via commission. But also, I have to tell you, for a lot of agents, it’s the ease of doing business of the system itself that incents them to use it. It makes their lives easier. It allows them to deliver more value to their customer more efficiently. And that’s incentive enough, I think, for them to choose Chubb for their small business clients.
Q: Making it easy for the agent is different from making it easy and understandable for clients, who in many cases may not have a clue what they need, what the policy is about. Is there anything in this system of a communication from the agent to the client that simplifies things or summarizes everything in a way that clients can understand?
Williamson: I think about it a little differently. And let me explain why. I think Marketplace contributes tremendously to the end buyer having a better understanding of what they’re getting and also making sure they get the right product because we make it easier for the agent to deliver that service to them. Small business owners, by and large, want the counsel of an independent agent when they’re making these decisions. And to that extent, we can make the work of actually placing the policy easier. That frees the agent up to spend more time with that client, offering advisory services, explaining the coverage, helping them to understand what they’re buying. So that’s, I think, an important way that we contribute.
And then also in knowledge and support…There’s a lot of materials there that help educate the agent on the offerings from Chubb that they can then extend to their small business owner clients, which I think get a lot to the issue you’re describing.
Q: A system like this is quicker and more efficient than the old style of sending in applications and all that. Why is it so important in the small business area for a company like Chubb to make this whole process more efficient? We hear a lot about the difficulty of writing small business profitably. Is this a major contributor to being able to do that?
Williamson: It is. It’s a major contributor for our agents and also for Chubb. When we made the decision to build this capability, and then certainly when we designed it, the goal we had in mind was to allow our agents to service their small business clients but to do it profitably. And if you talk to a broad range of independent agents, small business is everywhere. It’s in their communities. Small business owners are approaching them for help. But in a lot of cases, agents believe that they can’t make money serving those clients. Marketplace was designed to allow them to deliver high-quality service for the small business owner but to also do it profitably. And the way you do that is you make it faster and easier for them to conduct transactions so that they can then serve the client and do all of that economically.
It’s also important for Chubb. You have to underwrite this business, but you want to do it with analytics and with computer modeling so that you don’t have to have an army of people processing these transactions. They’re just too small. So, to give you an example, about 85 percent of our submissions for our BOP product can flow straight through our system without any human intervention on Chubb’s part. And that allows us to invest in technology, invest in data, invest in our agents, in our products by not having really high operating costs on a per transaction basis. So, it’s absolutely essential if you want to be successful and you want to scale up small business to have this kind of capability.
Q: Is Chubb seeing costs come down in the servicing of small businesses since Marketplace?
Williamson: We’ve seen costs come down, but most importantly, we’ve been able to scale very rapidly. This business is growing very rapidly without having to grow a whole servicing group to support the business. It’s a highly scalable model that allows us to operate very efficiently and to grow very quickly in service of our agents using the automation technology.
Q: So, even beyond the investment that you obviously have to make in IT for putting this together and all the people, there’s still economies to doing business this way?
Williamson: Absolutely. We have to hire really great technology folks and analytical resources to develop and design these kinds of offerings, and Chubb is absolutely making that investment. But…as you do that, what you then find is you have a capability here that we can scale across multiple Chubb businesses, can grow to service many tens of thousands and hundreds of thousands of clients, and can deliver enormous value to our agents and deliver really great returns on investment for Chubb.
So, there’s no doubt that a lot of the savings that you get from not having to hire lots of people to process the business then gets invested in people that can design and develop technology. It’s just that the scalability of those investments is much greater. And we’re able to really grow this business very rapidly now that we have this capability in place.
Q: Is Marketplace a U.S.-only system now or can brokers outside of the United States use it?
Williamson: Today, this is U.S.-only. But I will tell you, a couple of really exciting things have been happening. One, when we were designing this, we were absolutely leveraging the experience of Chubb teams outside the U.S. who have built capabilities like this in markets in Latin America and Asia, in particular. At the same time, now that we rolled this out, we are consulting with Chubb teams in those geographies and in Europe on how they can develop or leverage this technology in their market. Chubb is a global organization, and we absolutely share expertise and capabilities across borders. But today Marketplace is live in the U.S.
Q: Can you paint a picture how this way of handling small business accounts differs from how it used to be done? Did the underwriters have piles of manuals next to their desks? What was it like before Marketplace?
Williamson: You don’t have to go back in time to see that complexity. I think if you go to a lot of carriers, that’s absolutely what’s happening. It’s literally paper manuals on desks with underwriters configuring policies that way. Or they’re using technology that’s wildly outdated. The old-fashioned green screen is still alive and well in other parts of the insurance industry. So, it was just a very time-consuming, error-prone, not very customer-friendly approach. And if you contrast that with Marketplace where all that complexity has been automated and we provide a user experience that gives the agent access to all that robustness without having to worry about the details, that’s really the best of both worlds.
Q: What have you seen in terms of usage of Marketplace over the year?
Williamson: We’re pretty limited in what we provide externally, but here’s what I would say. We launched this at the end of 2017. We launched it in one state with 12 agents. We now have almost 4,000 agents live in the system. And we also have almost a thousand unique users every day who are submitting business. So, to go from zero to that level of usage, I think, gives you an idea of how rapidly this business is growing and how quickly we’re adding new clients to our business.
Q: It’s in all states now too. Is that right?
Williamson: We’re pretty much in the entire continental United States with the exception of Louisiana, and we also aren’t open in Alaska or Hawaii.
Q: What other things are in store for Marketplace?
Williamson: I mentioned all the expansion work we’ve done in 2018, [and] we will continue to add new industry segments. For example, we’re launching a restaurant program in the first quarter of 2019. We’re going to be launching habitation. We’re going to be launching health and fitness, religious institutions and other segments that will provide the capability for agents. We’re going to be adding more products to the system. So, we talked a little bit about how, for financial products, the agent has to bridge out to another system. That will be changing, and they’ll all be integrated to Marketplace.
The size threshold of client that can be dealt with in Marketplace is continuously [changing]. If you’re an independent contractor who just started a new consulting business, we could sell you a $485 policy that offers you great property in general liability coverage. And then if you invent the next one great invention, and you grow to be the largest technology firm in the world, and you have sales of $30 billion—well, guess what? Chubb can do that too, and we do everything in between. So, we’ve really made it possible for our clients to continuously grow with us. And there’s no client too big or too small to be Chubb insured.
In Part 3 of this article, Williamson discusses Chubb’s relationships with digital agencies—InsurTechs like CoverHound, Bunker and Insureon. See related article, “How Chubb’s Marketplace Works With InsurTechs.”