Insurance catches up with the times

Established insurance industry firms and newcomers increasingly are selling commercial insurance coverage through digital channels as the explosion in insurtech initiatives continues to transform the sector.

Largely limited to insurance coverage for small and midsize businesses, the online underwriting and placement platforms allow buyers to review and bind coverage for a wide variety of risks with many industry participants saying the efforts lead to an improved insurance purchasing experience for buyers.

Independent agents and brokers often are included in the buying process, while many administrative tasks have been automated, experts say.

While efforts to digitize large commercial placements are also developing, most of those projects do not use digital underwriting and binding technology that is openly accessible online.

From insurers rooted in the 300-year-old Lloyd’s of London market, such as Hiscox Ltd., to tech startups such as CoverWallet Inc., there is an increasing variety of insurers and technology firms offering commercial coverage online.

“We’ve seen a number of different plays” to meet customer needs and to sell insurance to small business more effectively, said Michael Reilly, managing director in Philadelphia with Accenture PLC’s insurance practice.

Kevin Kerridge, executive vice president for small business direct and partnerships and a partner with Hiscox USA, said when he first moved to New York in 2009, he was amazed there were “no digital capabilities whatsoever in the small commercial space.”

“Everything else in life in the U.S. was in the same place as, or ahead of, where Europe was, whether its banking, books or even car insurance,” Mr. Kerridge said.

Hiscox built and launched its digital capability for small businesses in 2010 and now has 340,000 policyholders, he said. The insurer focuses on businesses with annual revenue of $5 million or less — Mr. Kerridge said 95% of policyholders are “five-employee businesses or under” — and offers policies including some professional liability coverages.

Independent tech startup CoverWallet has an onboarding process for insurers that includes discussions about product mix and structure prior to the insurers’ products going on the portal. Small businesses may then bind coverage on the CoverWallet site, even using a credit card to pay.

“We are an online platform,” said Rashmi Melgiri, co-founder of CoverWallet in New York, which provides users with quotes from multiple insurers on a variety of property/casualty products for small businesses. “We focus on property/casualty insurance for small business, including business owners policies, general liability, worker compensation, professional liability and more.”

In other online placement and underwriting efforts, leading commercial insurers partner with insurtech firms.

Axa XL, a unit of Axa SA, partnered with New York-based insurtech startup Slice Labs Inc. to establish an online portal selling cyber insurance with limits up to $3 million, said John Coletti, Axa XL’s chief underwriting officer for cyber and technology in New York.

“Our target customer is small and medium-sized enterprises,” Mr. Coletti said. “We’re focusing on any insured of $50 million and below in annual revenue,” initially targeting U.S. businesses after launching in October.

“Using an (application programming interface) that has data and analytics built into it, we can actually do the underwriting on an automated basis,” Mr. Coletti said. “We can rate, quote and bind a product in minutes without an underwriter touching the product.”

The process involves a data-driven scoring approach together with algorithmic underwriting, according to Tim Attia, co-founder and CEO of Slice Labs.

Other emerging technologies, including distributed ledger technology, or blockchain, and artificial intelligence learning, are also being tested and deployed for automated underwriting and placement functions for larger commercial risks, but those projects usually are not accessed openly via the internet.

Some large insurers have also taken stakes in startups; CoverWallet, for example, has backing from Starr Cos. and Zurich Insurance Group Ltd.

As they move online, insurers and insurtech companies are looking to other online industries for cues.

Customers’ experiences in their personal lives “drives the expectations they have in the commercial market,” Mr. Reilly of Accenture said.

“Being where the customer is, is probably the most important thing on the engagement side,” said Sastry Durvasula, chief digital officer and chief data and analytics officer for Marsh LLC in Phoenix.

“The small businesses are more like consumers than they are businesses,” Mr. Kerridge said. Insurers should think about small businesses as a consumer and “think like a marketing technology consumer business that just happens to sell insurance.”

“There is very little I can think of from a customer standpoint that you can’t buy online,” Ms. Melgiri of CoverWallet said.

From buying airline tickets to cars through digital platforms, “that experience has to trickle into the commercial space,” Mr. Durvasula said.

“Ultimately, it all comes down to the approach, which is customer first versus product first, and that’s the shift the industry has to go through,” he said. “The insurance industry had traditionally been product first. Retail and financial services have gone through the ‘Customer first revolution.’”

“If I can bank online, and manage major assets like my home online, then insurance should dovetail with that,” Mr. Durvasula said.

What about the brokers?

Brokers remain an integral and even growing part of the move online, sources said.

“While there are a lot of digital platforms out there, the reality is that most of those digital platforms are backed up pretty strongly by call centers,” Mr. Reilly said.

The Hiscox online portal is supported by two call centers staffed by 160 licensed small business insurance agents, who field 100,000 calls a month, Mr. Kerridge said.

Ms. Melgiri said CoverWallet is “high tech but also high touch.”

“We have a large sales force here of experienced, licensed agents who at any point during that online process” can be accessed. “And most customers do,” she said of the agents, all CoverWallet employees.

In addition, independent agents are interested in moving online, according to Ms. Melgiri.

“Early on, we started to get a lot of external pull from the typical independent agent,” she said. “So, on Dec. 18 we launched CoverWallet for Agents, taking the platform and making it accessible to independent agents.”

“As well as direct to consumer, a large part of what we do now is using this platform for agents who process small business traffic on our technology,” Mr. Kerridge said.

Dovetail Managing General Agency Corp., part of Victor Insurance Holdings — Marsh’s underwriting management unit — is specifically for brokers, said Brian McDermott, chief information officer at Victor in Hoboken, New Jersey.

He called it a “choice platform” as it provides brokers with a range of offerings from different insurers.

He said the growing use of platforms was “certainly inclusive of the broker.” At the end of 2017, Victor also launched V Squared, which now features a digital real estate insurance product in the United States, according to Mr. McDermott, and has plans to expand offerings on that channel.

“Digital platforms will not disintermediate insurance agents or brokers. In fact, it will have the opposite effect,” Ralph Blust, president of online insurance agency Insureon Solutions in Chicago, said in an email. “Technology eliminates many of the administrative tasks that often fill up brokers’ days, allowing them to focus their efforts on risk identification and mitigation, consulting their insureds and helping them better manage the financial exposures their clients face.”

The value of the broker will be enhanced as they focus less on administrative tasks and more on the strategic components a client faces in building a business,” he added.

All about the data

In addition to providing a new channel through which to sell commercial insurance to small and midsize businesses, digital online platforms represent a two-way data highway that can enrich insurers’ caches of information.

The data collection capabilities of the platforms “are a gateway for the carriers to learn more about that segment,” said Erica Davis, senior vice president for cyber with JLT Re (North America) Inc. in New York. Insurers can “learn more about the (small business) segment — what products are most helpful, what sort of claims exist in that segment — all helpful to drive growth and establish access to new markets.”

“Those that can harvest data and use technology to access the data in an intelligent manner can build the best product for the future,” Mr. McDermott said.

The risk management community appears to be embracing this and other moves toward technology, according to Audrey Rampinelli, who most recently served as a risk manager for Loews Corp.

“There is an appreciation for the solutions that are being brought to the table,” from the risk management community, she said.

“If you look at universities that have risk management disciplines, many are including insurtech courses,” she added.