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New Deloitte Study Echoes Some PIA Findings

Three years after consulting firm Deloitte raised considerable concern with a study that it said found that that nearly one in five small-business owners surveyed were very likely to buy insurance directly online under the right circumstances—and that close to half indicated they were at least open-minded about the possibility of bypassing their agent—the company is out with an updated survey...
May 10, 2016

Three years after consulting firm Deloitte raised considerable concern with a study that it said found that that nearly one in five small-business owners surveyed were very likely to buy insurance directly online under the right circumstances—and that close to half indicated they were at least open-minded about the possibility of bypassing their agent—the company is out with an updated survey. So what’s changed?

The new survey echoes some of the findings of PIA research, in showing that small business customers overwhelmingly prefer doing insurance business with their agent. Deloitte found that small business insurance customers are not abandoning their agents. Deloitte says:

“However, due to the complex nature of some commercial policies and intangible benefits provided by agents, online sales have been slow to develop in the small-business segment, accounting for less than 1 percent of US market share.” The firm then discusses several options for carriers, including sticking with the independent agency distribution system.

In an article in PC360, (“Small-business insurers must bolster agents to fight off online disruptors”) Deloitte lead researcher Sam Friedman details what carriers should do to bolster their agency distribution channel to counter online competition. Among the suggestions: agents offering more personalized service, such as shopping for the best coverage and lowest price; having one agent arrange all their policies, as no online carrier currently offers a complete portfolio of small-business insurance products online; and having someone to advocate for a small business through the claims process. Sixty-one percent of respondents in Deloitte’s study said not having an agent as a proponent in case of a claims dispute would be a big concern in buying direct.

“Small-business insurance buyers taking part in focus groups and surveys for Deloitte said dropping their agent would mean having no one but themselves to blame if they have a gap in coverage,” notes Friedman, an author of the new study.

“Insurers also should not discount the psychological factors involved with convincing a small-business owner to drop their insurance agent,” he notes. “Independent agencies are often small businesses just like their clients, operating in the same communities and belonging to the same neighborhood associations. Doing business in such close quarters can create a personal relationship that’s difficult for a rival agent to disrupt, let alone a distant insurer looking to impersonally sell direct to consumers online.”

Extensive nationwide research conducted over the past year by The PIA Partnership, PIA’s agency-company council, also found that small business owners strongly prefer independent insurance agents as they make choices in today’s online world, but that agents must take steps to continue to demonstrate their value and be more engaged online. Our research results, part of “Small Business Insurance & The Internet—The Voice of the Commercial Lines Customer,” led to the development of tools to meet the new challenges posed by online providers and direct writers. It also spurred PIA to initiate an industry-wide dialogue on the concept of a “Buy Button” for independent agents that would allow them to do real-time binding of policies.


The new research on customer preferences bolsters PIA’s findings. You can read Deloitte’s full report here.

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