How to sell commercial coverage to small businesses

Brokers looking to sell commercial coverage to small businesses need to keep it simple, fast and client-specific, industry professionals told Canadian Underwriter Thursday.

Sometimes when buzzwords like artificial intelligence, blockchain and chatbots dominate the conversation, the cart comes before the horse when it comes to selling commercial insurance.

“Sometimes people start with a solution and then they try and figure out what the problem is,” said Danish Yusuf, CEO and co-founder of Zensurance, an online brokerage that exclusively offers small business insurance.

This is not a problem exclusive to insurance, but could be said about any industry trying to leverage technology.

“What we do, and what I would suggest in general, is identify what the problem is you are trying to solve for,” Yusuf said. “If you are in a remote village, there’s no point to try and sell technology, E&O and cyber coverage to tech start-ups if they don’t exist in your area.”

Taking a more consultative approach with small business customers than other commercial customers was considered a best practice (8-10 out 10) by 70% of brokers who answered the following question in Canadian Underwriter’s 2018 National Broker Survey: “over the past 24 months, how beneficial has each of these additional practices been for serving your small business customers.” Other choices included finding lower-priced coverage options, operating outside of regular business hours and acquiring an understanding of the customer’s growth plans.

Keeping it simple is another recommendation. “Offer a broad product that generally addresses all the needs of a small business so the buyer does not have to worry that they are buying a sub-standard policy that may exclude some basic coverages,” suggested Sue Duggan, director of product development and small business underwriting at Northbridge Insurance.

Speed is also of the essence for small businesses. “The vast majority of small business owners do not have time to shop around for their insurance, so you have to be able to quote your product quickly and by using all available avenues,” Duggan said. “Using technology to speed up the sales and claims process is become more and more critical for insurers.”

Utilize the power of data analytics and keep ahead of the trends, such as cyber coverage, Duggan added.

Before Zensurance was launched in 2016, the company had few hypotheses they wanted to test around small business coverage. For example, the brokerage thought customers would largely be Millenials, concentrated in big metropolitan cities and looking for hard-to-place risks. However, that’s not been the case – the vast majority of Zensurance’s customers are over the age of 35; from places like Truro, N.S., Brandon, Man. and Red Deer, Alta; and from “main street-type businesses that are looking for a fast, simple way to buy insurance.

“So, one guidance for brokers is not to fall into those stereotypes,” Yusuf said.

He also identified some challenges selling commercial insurance to small businesses:

• There are thousands of permutations of what a small business could be – a coffee shop is different from a laundromat, and $10,000 in revenue is different than $1 million in revenue
• Lack of standardization – application forms and policy wording vary dramatically across insurers
• Large variation of risk appetite by the insurer – In one case, Zensurance wanted to place coverage for a small resort in northern Ontario, but couldn’t get it. “We went market by market and everyone had a different reason to decline it, so how do you standardize something when it’s so fragmented?” asked Yusuf.
• Explaining policy wording to a business owner that doesn’t know anything about insurance.

What types of coverage are clients asking for? The Top 4 according to Duggan are:

• Liability – usually the trigger that starts a small business down the path of insurance when they are renting on a location or taking on a new contract.
• Property – fire and water are the two biggest perils owners worry about
• Business interruption – allows the doors to stay open in case of a property loss
• Cyber – fairly new coverage, but “many owners do not realize how significant of an exposure this can be and need corresponding coverage.”

Yusuf finds commercial general liability (CGL) is the base for almost any business. “If insurance was Thanksgiving, CGL would be the turkey. You can’t have Thanksgiving without the turkey.”