Small commercial insurers need to go online

Small commercial insurers need to prepare for a significant portion of customers wanting to go online to buy direct within the next five years, according to insurance research and advisory firm Novarica.

The report, Direct Online Small Commercial Insurance: Preparing for the Inevitable, claimed commercial line insurers will follow the lead of personal insurers where a significant portion of the market favours direct online channels.

Novarica said the only thing that is holding this market back was a lack of investment from insurers. It added, however, that one or two well-funded aggressive new entrants in the market could change that very quickly.

"Surveys show that buyers are increasingly open to using the channel, and buyer sentiment seems to be moving toward a price and convenience value proposition. Early movers in the marketplace, like Hiscox, Insureon, and BOLT, are reporting successes," said Matthew Josefowicz, managing director at Novarica and author of the report.

"Even if insurers are not ready to move into this market today, they need to start planning to adapt to this coming change by investing in straight-through processing, online quoting and sales, and product simplification," he added. "Luckily for insurers, these are all things they should be doing anyway to support the agent channel."