Recently, McKinsey & Company released a survey detailing the small business commercial insurance market and its growth potential. The paper highlighted a number of statistics that show the commercial space in rapid transition.
Over the next years, the paper predicts the sector to open up in competition, as it continues to grow and be recognized for its worth in property and casualty insurance. However, because so many small businesses utilize alternative methods when shopping for insurance, many of the larger insurance companies are not well equipped to take advantage of the opportunity.
Much of McKinsey’s research focuses on this fact: insurers need to grow with technology to remain relevant and competitive in an area of insurance that is surging. With such a segmented market, it will be important for carriers to cater to their customers’ specifications. This will mean adding targeted offerings based on targeted data, namely non-traditional data. McKinsey predicts that success in the small business sector will be dependent on carriers’ ability to meet the unique needs of their customers. The paper also highlights that carriers with customer-facing capabilities, as well as carriers with digital expertise, will have the biggest advantage in the market, particularly in their ability to combat the legacy issues seen in the space thus far. This is because customer preferences are quickly changing. Many consumers see value in their data, and offerings that allow them to capitalize on it, by way of better pricing and more streamlined processes, are particularly appealing.
Non-traditional data’s power, on its own, can be a game changer for carriers. Not only can it aid in assessing risk in the underwriting process, but it’s potential to play a role in marketing research will also be vital to insurers looking to move into the commercial small business space. “To reach the nearly 50 percent of small commercial consumers who are open to switching in every renewal cycle, carriers must harness new and more granular insights into customer behavior”, the paper states. Non-traditional and unique data sources may hold the key here, and could potentially unlock success through the use of predictive analytics. With the wealth of data available online and through other non-legacy sources, leveraging it is imperative to remaining relevant in this sector, and in the insurance market in general.
To read the full paper, head over to McKinsey & Company’s site to request a copy.
