The new small commercial: Why carriers need to better serve "small specialty"
The evolution of the small businesses is creating a service challenge for independent agents and an opportunity for carriers to provide efficient and effective solutions for their agent partners by expanding their service center capabilities.
While there was a time when most small businesses were well protected by a BOP, those days are gone. Increasingly, small businesses require specialized coverages, such as errors and omissions, marine, fidelity and crime, cyber, and employment practices or fiduciary liability. These new risks are forming a new market segment - small specialty - and all indications are that the segment will only continue to grow moving forward as customers' needs become increasingly complex.
Unfortunately, while carriers have become adept at managing BOP-focused small commercial business in service centers, they generally have not been able to serve the small specialty market in those same centers. Consequently, agents are forced to do one of two things – split the servicing of their small business accounts, placing BOP business in a service center and retaining servicing responsibilities for small specialty, or retain servicing responsibilities for the full account. Generally speaking, neither is a good solution. Both preclude agents from fully capitalizing on the benefits service centers offer. With the shift to a more account-focused approach to insurance, service centers must be equipped to manage these more complex, robust policies.
The industry sells agents on service centers with extended hours, increased agency efficiency and a reduction in expenses. Are agents truly getting what they were sold if only half of an account is serviced in a service center? Likely, the answer is no. To get the full benefit, a customer's whole account needs to be placed in the service center. It's time for the industry to respond to this unmet need, adapting their service centers to accommodate the evolving needs of modern small businesses.
The good news for agents is that the shift is beginning. To better serve the needs of small businesses with specialty risks, select carriers have expanded their service center capabilities, and agents are beginning to place more specialty business in customer service centers.
As we thought through the changing small business environment, it was clear an innovative, collaborative partnership with our specialty team would be the best solution for our agents and customers. A colleague of mine, Bryan Salvatore, who has spent his career in the specialty insurance business and heads The Hanover's specialty division, believes the industry is at a crossroad, with top carriers rethinking their service center models in order to best serve their agent partners.
Bryan said, "Agents tell us the industry has done a good job servicing core commercial lines, but it needs to do more to service the smaller, specialty lines. The more carriers work to stitch core lines together with specialty lines, the easier it is for agents to place business. With an all-lines customer service center, carriers are better equipped to serve these small specialty accounts and improve the service experience for agents."
Small commercial service centers that serve both BOP and specialty lines offer significant advantages. They can help agencies provide an all-in-one experience, while improving their economics and saving valuable staff time. As exposures evolve and grow in complexity, carrier service centers that can effectively serve all lines of risk for small businesses are well positioned to help their agent partners.
The unrealized benefits of customer service centers
Not only should a small commercial service center be able to manage specialty lines, but they also should be able to offer a sales advantage for agents. The best service centers are staffed with licensed professionals, ready to offer advice and suggestions to customers, helping to round out accounts and recommend needed coverage enhancements.
When we look at our small commercial book of business, we often will identify customers whose businesses and risks may have evolved and would now benefit from specialty coverages. In this respect, service centers can offer significant value for agents. Service centers that can effectively service BOPs and also understand specialty lines offer a competitive advantage to agents. With a broader view of small business customers and their needs, service centers are well positioned to identify gaps in customers' coverages and provide valued counsel.
Additionally, the best centers have the ability to help agents attract new customers. A service center that has broad expertise in a variety of coverages can help an agency expand their customer base, offering the ability to provide counsel and offer policies to agencies' prospects, meaning added time, revenue, and value for the agency.
Carriers are beginning to build out their service centers and leading agents are taking advantage of those that are able to manage all aspects of their small business accounts, including those with specialty exposures. By placing total accounts into service centers, agents are improving the efficiency of their operations, better servicing their clients and generating critical growth.
About the author
Mike Keane serves as senior vice president of Core Commercial at The Hanover. With more than 20 years of experience in the insurance industry, he is responsible for the company's Core Commercial business, which includes Small Commercial and Middle Market, as well as Technology and Product Development.