Streamlining Small Business Insurance through Broker-Carrier Connectivity
Our delivery model from the beginning was to be a pure MGA or carrier back office, providing underwriting and policy servicing on our carriers’ behalf to agents, and letting agents do what they do best – managing relationships with insureds.
We feel the MGA model provides better value-add to all members of the small business insurance transaction, whether you’re the carrier, agent or policyholder, and it positions Dovetail to provide better visibility on the performance of each insurance product to the carrier.
Our technology platform is being developed in such a way that if a direct channel evolves, nothing will be a barrier to going that route; however, we believe that the agent adds a lot of value in the insurance transaction as a qualifying factor, a trusted advisor and consultant. Buying insurance for a small business is complicated, and it requires expertise that isn’t necessarily innate in small business owners today. As a result, buying direct could lead to a small business owner being underinsured or not having the right coverages for their business.
In our lives outside of work, our expectations of technology as individuals have all evolved in the past 10 years. When you go to book a flight or buy something off Amazon, your expectation of that experience has changed. You know what is a good digital experience and what is not. Couple that with the changing workforce, with millennials comprising the largest segment of the working population, and we know the workplace of tomorrow will be different. According to our recent white paper, Agencies of the Future, “the differences that will distinguish tomorrow’s agencies are likely to be less about what agencies do, and more about how they do it.”
Brokers, account managers and employees need to bring that mindset into the workplace and demand change because brokerages that make this shift are rapidly going to become more efficient and effective than those that don’t. We see it everyday – processes that work well and those that don’t. The small commercial space is such that you can’t afford to be in it as a broker or carrier and do things the way you’ve always done them. You will never make money at it. That’s why it’s an underserved marketplace.
Those that adopt technology, invest in efficiency, and move rapidly are going to build the scale they need to be effective in small commercial insurance. From a risk spread perspective, a loss ratio perspective, and an operational effectiveness perspective, I would argue that there is a mandatory critical mass for success that many carriers do not reach in small commercial premium volume. We’ve talked to carriers that struggle to figure out how to make money in this area, but they definitely see potential for the future if the right steps are taken.