As published in Leader's Edge
Q&A with Erin Fenlon, Vice President, Small Commercial Operations, The Hanover
Small commercial insurance accounts for more than one-third of the U.S. commercial lines market and is one of the few P&C markets that has been growing in recent years, according to McKinsey.
The underlying trends that were taking shape in the market prior to the COVID-19 pandemic haven’t slowed down, and if anything, have accelerated. Insurtechs entering the marketplace, high customer expectations, and more complicated small business exposures have combined to create service pressure and challenges across the value chain. The days of small businesses being protected by a simple Business Owners Policy (BOP) are long gone, and today, it is up to agents, brokers and carriers to find ways to deliver fast and seamless customer service in an increasingly complicated small commercial landscape.
Q: How has recent consolidation sped up innovation in the small commercial space?
A: The amount of M&A activity in recent years has put tremendous overall pressure on brokers. Their small commercial books are getting larger and they have a lot more volume and a lot more carriers to choose from. And I believe it’s important that the brokers now think about how they’re going to manage that small commercial book and be efficient. That, to me, requires them to partner with a carrier that is investing in capabilities, and platforms, and servicing to make the agent and broker experience easier. That’s the place that I’ve seen more agents and brokers having higher expectations of their carrier partners regarding technology, service and digital options that support them to be more efficient, and better cover the full account solution.
Q: Can you elaborate on those expectations?
A: The traditional view of small commercial was simple—a BOP, workers comp, auto, umbrella. That’s how it was sold and how it’s been interpreted, but that limited offering doesn’t really help a broker in today’s environment. And it’s not the way carriers should be thinking about it. Brokers should be expecting and demanding that their top carriers solve their customers’ needs in the totality. Open the newspaper and everything’s about EPL, crime, cyber and professional liability. That’s the reality of the small account space. It’s very complex every day. And I think it’s going to force carriers to stop thinking in a silo of traditional small commercial.
We’re engaging a lot more with our brokers around the need for more technology and digital service options to serve their customers, as well as the need for quicker quoting and issuing platforms. These brokers are trying to pick fewer partners with broader product and service capabilities so they’re not wasting their time. It’s imperative for carriers to respond to their needs.
Q: Tell us about the convergence of increasing customer demand for all things simpler and faster, and the reality of more and more complex risks in the small commercial space. How do those two things come together?
A: This is really the most impactful transformation in small commercial in my mind. The most important thing I think carriers can do is think about how agents and brokers need to find solutions for the small business owner. You can’t say, ‘Here’s half of the solution. Good luck with the rest of it.’ The carrier has to look at the small commercial business needs broader than that and think about what brokers require to be the strongest advisor for them and be the consultant who has the expertise on all their exposures.
And that’s where, to me, carriers who offer products that cover those needs combined with the ease of doing business in an online quoting platform is making it easier for the agent to achieve their goals. Carriers have to design the online quoting from the agent lens and make it easy for them to do a total account solution, whether it’s for professional or E&S or crime coverages. And until you can marry those, then agents are not truly solving your small business owners’ issues and the carriers aren’t solving their agents’ issues.
Q: When it comes to investing in technologies and tools to satisfy different customer demands, insurance companies have a choice: invest or don't, and then either build it yourself or buy a solution. What was the strategy behind The Hanover’s new TAP Sales quoting platform?
A: We have an approach to innovation where we will leverage both scenarios. We have vendor partners who can help us achieve what we want, and we have our internal Hanover resources that can conceive and build our solutions. It’s often a combination of the two that we leverage. In addition, we want to make sure we identify what the problem is we’re trying to solve and go from there. We don’t ever want to start off with a solution and look for a problem to solve with it. That to me is one of the biggest mistakes you can make.
We launched the TAP Sales quote and issuance platform with our personal lines business and then we added specialty coverages and small commercial to that platform. We designed and built an integrated “front door” experience into The Hanover ourselves with our agents at the table. Then we partnered on the different quote components based on the line of business or the solution that we needed to create.
Q: How is the TAP system designed to help the agent/broker, and will the end customer notice a difference?
A: We focused on three different things: less text-heavy screens (75% less text), better navigation with simple tiles and modal boxes (50% less entry required), and cutting down on overall quote time (50% less). Speed to quote is critical. If the system was just a new BOP platform that was streamlined, that in itself would be an improvement. But our capabilities for quote and issuance have been built much broader to handle complex small commercial coverages such as cyber, management liability, marine, professional liability, and others.
Customers expect options. They want to have a good, better and best option. They want quotes on umbrellas at $1 million, $5 million and $10 million. Each customer has a unique coverage need and wants options to increase or decrease limits, and that’s where The Hanover’s system becomes much more effective for that account manager. The agent gets fewer servicing calls and can spend more time and energy in value-added activities. To us, that’s the most important driver behind our technology advancements—how can we help our agents improve the customer experience and provide more value to their customers.