Commercial Lines Insurers Cannot Afford to Stand Idle in Today’s Channel Environment

November 07 2022 | Mark Breading

Aggressive channel expansion plans are nothing new to commercial lines insurers. In fact, many insurers have built relationships, technology capabilities, and brand recognition for years to form the foundation for their channel strategies today. But 2022 is presenting new challenges that are forcing insurers to shift their channel focus – while initiatives remain aggressive, insurers are scaling back and being more cautious as major transformation continues within insurance distribution.

MBBlog110722 350x250According to a recent SMA survey of executives, ninety-one percent of small commercial lines insurers and 82% of mid/large commercial lines insurers have plans to expand their channel partnerships. When you consider the evolving distribution landscape, including increased consolidation, new entrants, and more sophisticated technology, it is no surprise that carriers are exploring different channels that will allow them to reach and service customers effectively.

How commercial lines carriers address channel expansion is influenced by several factors, such as growth plans, target markets/segments, and other strategic initiatives. In both small and mid/large commercial lines, there is more focus on InsurTech/digital agents than a year ago, with 61% and 68% of each segment, respectively, expanding or adding the channel. Many insurers now view InsurTech digital agencies as just another independent agency option, while others see opportunities with the technologies offered by these firms.

Among carriers' expansion plans emerges a new trend, particularly in the mid/large commercial segment – increased interest in direct models. More than 30% of carriers report plans to add direct business via call center/web, and 21% say they plan to add web/mobile direct business. As technology has evolved, mid/large commercial lines carriers have found new abilities to provide policyholder service and reach new customers directly, bucking the historical trend that deemed the risks too complex.

The fierce activity across commercial lines to expand channel options proves that complacency is not an option for insurers seeking to remain competitive. The various options available in the market today present new opportunities for carriers to be strategic about aligning their channel plans with their targeted industries and product segments while also not undermining the importance of long-standing partnerships.

For more information on commercial lines distribution expansion strategies, see our recent research report, “Channel Strategies for P&C Small and Mid/Large Commercial Lines: Plans for 2023 and Beyond.” This report is part of SMA’s research series based on surveys and interviews of insurers, agencies, brokers, MGAs, and others in the distribution channel, including insights from ReSource Pro’s large footprint of distribution clients. Contact the author for more information on this new research and advisory services for distribution.

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To learn more, please contact:
Mark Breading
ReSource Pro