In the U.S.’s commercial property/casualty insurance market, small commercial business risks make up more than a third of the accounts written. With such a large percentage making up the quota of written premium, why haven’t insurance carriers taken advantage of the huge opportunity to craft underwriting and processing of these risks easier, quicker and making coverage more accessible?
David Lupica, Division President of ACE Commercial Risk Services, recently wrote for Carrier Management of the huge margin many carriers are missing out on simply because of the “risk over reward” mentality of many underwriting offices. Most companies do provide coverage for the small business sector, but the coverage needs and the suite of services are usually not as extensive, making coverage gaps and under insured businesses more likely.
As a network of independent agencies that value writing small business accounts, ANE could not agree more with Lupica. Small commercial policies provide a large, dynamic sector for carriers to underwrite and create a significant profit center for carrier and agents alike. Companies, such as ACE, have recognized the complex needs of some of these businesses when writing these accounts. The risks can be higher, such as liabilities arising from pollution conditions or protection for employees traveling out of the country. With the right coverages, many of these accounts can prove fruitful. If a carrier provides a larger appetite for these types of accounts, the agent will in-turn be well-versed when explaining the needs to a small business owner. This increases the odds of closing a sale faster, so the agent can focus on more new business.
As Lupica states,
“Since small business owners are extremely busy managing their day-to-day operations, they want someone to take the guesswork out of insurance, so they can focus on developing their business rather than worry about their risks.”
Carriers should also recognize the chance they take with small businesses may equal a higher premium in the pipeline. The main goal of the majority of these “small” businesses is to grow larger. This gives carriers a chance to grow their insurance programs with these risks, rather than be remarketed elsewhere.
Although the small commercial property/casualty market is nothing new, the opportunity for carriers and agents to see larger profits in this arena expands with the development of new products to service these unique needs.