How many times has that been said about commercial lines insurance? The prevalence of the trusted advisor model, the independent agent, is evidence of the value of an intermediary between the insured and the insurer. But, relationships are expensive and at low premium levels, not worth the investment.
Just ask the small business owner. Servicing a policyholder whose premium is in the $2,000 to $10,000 range is problematic. Agents are hard pressed to conduct risk reviews to identify emerging exposures. Risk engineering and safety audits do not have a positive payback. Technology increasingly enables companies (and agents) to underwrite policies and accept or reject them based on standard application information without underwriter intervention (commonly called straight through processing or STP), totally removing any consultative human element from the transaction.
That’s why a recent briefing was especially interesting to me. A software vendor reviewed their newly launched initiative which uses their technology to sell to and service the small business customers of one of the largest credit card companies in the world. Their program will provide an immediate quote from participating insures to an applicant who submits their information through a web browser. If help is required, there is online chat and call center support available.
The quote and issue process is very impressive and represents the best in leveraging open architecture and standards that our industry has been working so hard on for so many years. The intriguing part for me, though, is the possibility of linking the credit card history with advanced monitoring software to reach a new level of risk service for this typically underserved market.
Like an individual, a small business has a repeated and predictable buying pattern. When this patterns changes, there is the probability that the business faces new risks that may not be covered under a standard Business Owners Policy (BOP). Credit card companies use sophisticated fraud detection routines to identify abnormal buying patterns. (Who hasn’t received that scary voicemail from the Fraud Department saying “call us immediately”?) The same approach can be applied to small commercial accounts. For example, if a business begins charging international airline tickets, it is an indication that the company will soon begin selling products globally. At a minimum, the owner needs to understand the risks to the business when employee(s) travel overseas. It would be very simple to generate an email to this effect, or use the call center or an advanced interactive voice response system to contact the owner and make them aware of the insurance coverage options for such risks. This automated risk management thus replaces what usually happens in an agent relationship.
There are risks and privacy issues related to the increasing amounts of data mining that is now possible. However, when I see such a convergence of analytics, standards, automated underwriting, and technology-driven support structures, I am encouraged by the benefits which such advances can bring.