When you hear the words “niche business,” do ghost kitchens, mobile beer trucks and CBD wellness shops come to mind?
Executive SummaryA great niche small business product won’t benefit an insurance carrier if no one knows about it, say executives of two InsurTechs working to simplify insurance distribution—Semsee and Coterie. Here, they explain why they believe InsurTechs can help insurers get niche coverage products for ghost kitchens, CBD wellness shops and other emerging business types to market faster.
These are just a few of the new ideas that have gone from concept to growing new business segment in the last several years.
New businesses mean specialized risks and opportunities for carriers. But providing insurance to these niches is not necessarily business as usual. New businesses may have special needs in terms of coverage. They’re often owned by younger entrepreneurs who may have different expectations about how they buy insurance. And some of these same owners have less knowledge about insurance overall, requiring more education about what they need.
The opportunity to reach more small businesses is real. According to a 2016 McKinsey report, 40 percent of sole proprietorships in the U.S. do not carry small commercial coverage. But as the impacts of the pandemic continue to be felt, more business owners are realizing that they not only need coverage—they need the right coverage.
Creating an insurance product that customers want is only step one. Step two is making customers and agents aware of the product. That’s where technology partnerships can play a big role.
Tapping the small commercial market requires products that are both efficient for agents to sell and affordable for clients to buy. Agents can’t spend weeks selling policies with small commissions, and customers need coverage at a price point friendly to startups.
The drive for nimble products that can be created with speed and affordability have inspired new, digitally focused insurers to enter the market, harnessing the power of technology to create unique solutions that agents can sell quickly at a price point friendly to clients. Some, for example, use analytics to pull in information from different resources, limiting the amount of information a customer has to submit and making it faster to apply for coverage.
But a great product won’t benefit an insurer if no one knows about it. The challenge increases if the carrier is new to the market and doesn’t have brand-name recognition. Getting on agents’ radars has traditionally be a laborious hands-on effort requiring one-on-one agent outreach, telling them about the product and trying to convince them to make it part of their workflows.
When Speed to Market Matters
Agent-focused InsurTechs are making it easier for MGAs and carriers to bring their products to market. Many have ready-made agent communities in place, enabling the insurers’ products to get in front of more agents faster. For example, a single InsurTech partnership can often give the insurer visibility with a thousand or more agents, an audience that would take weeks or months to reach using traditional relationship-building. But, most importantly, these new digital agent-first platforms help agents learn about and access unique products that new businesses owners want and need.
It can be a symbiotic relationship. Agents want InsurTechs to help them deliver a better experience to customers with easy access to the best coverage at the best price. At the same time, InsurTechs partner with a wide range of carriers offering products and options. InsurTechs can also enable carriers to connect to agents and increase visibility.
And perhaps most importantly, InsurTech partnerships can bring the new products to the agent at the point where it matters most: at the point-of-sale, the moment when the buying decision is being made. For example, a new digital carrier recently launched a general liability product catering specifically to restaurants. It integrates with a quoting InsurTech, so when agents on the platform quote that specific risk, it generates a quote from the digital carrier as well as any other relevant carriers on the InsurTech’s platform. Agents who may not be familiar with the new digital carrier’s product will automatically be shown a quote. This is a win for the carrier, the agent and, ultimately, the small business owner who has access to more options.
Buyer Expectations Are Changing
Digital expectations have changed. Customers of all ages have become increasingly more digital in the wake of the pandemic. Small commercial is a complex product, and while customers want guidance from agents, most want to be able to begin the process themselves. Carriers should make sure they have websites or landing pages devoted to the niche products. While it doesn’t have to go into the specifics of what the product offers, customers should be able to get a general understanding of the coverage, an idea of the price and information about how they can find an agent to help them complete the process.
Customers also want transparency when shopping for coverage. Semsee’s study showed that 80 percent of small business owners want their agents to provide quotes from multiple carriers and offer the ability to see and compare coverage. Agents will choose to work with carriers that make it fast and easy to obtain information.
Small commercial is ripe with opportunities, and getting new products to market fast and effectively is vital in order to be successful. Partnering with InsurTechs can help make offerings accessible to a large number of agents in a short amount of time. How can carriers identify the right InsurTechs? Look for solutions that are equally focused on staying in tune with market needs, building their communities of agents and delivering a great customer experience.
By finding the right InsurTechs and working together, carriers can acquire a large customer base for their new coverage.