Middle Market Companies Want More From Insurers, Survey Finds

By John Hilton

A new survey finds a willing middle market should insurers opt to diversify services into fields such as employee benefits, accounting and even social media management.

However, while that pivot will strengthen the insurance company for the long term, it won’t come without a significant commitment.

Nine out of 10 buyers surveyed said they would “welcome receiving additional business-support services” through their insurance company, according to the Deloitte Middle Market Insurance Consumer Survey of buyers, agents and brokers.

“The insurance industry really struggles for ways to grow,” said John Lucker, principal and global advanced analytics market leader for Deloitte & Touche. “Companies differentiate themselves by pricing to the bottom, and that’s a very tough business model.”

In many cases, there is a natural opportunity for insurers to branch out into other services, added Matthew Carrier, principal and leader of Deloitte Consulting’s underwriting excellence practice. Insurers have much of the infrastructure in place to do so.

Unfortunately, large insurers are very “siloed,” Carrier explained, with different divisions that operate as fiefdoms rarely coordinating efforts with other departments.

Employee benefits represents enormous opportunity for forward-thinking insurers who want to partner on deals with benefits providers. Selected by 48 percent of respondents, it ranked No. 1 among a lengthy list of support services companies are interested in receiving from insurers. “Property safety systems” ranked second at 40 percent.

“One of the things that needs to be overcome is the willingness of employee benefits companies to participate in some of those deals,” Carrier said. “I do think it’s a very natural fit, but I think there needs to be an insurance company who steps up and finds ways to make that relationship drive value for both parties.”

The rest of the top-five services that middle-market companies are most interested in receiving from insurers includes: property security services, 38 percent; business management advice, 37 percent, and regulatory compliance support, 35 percent.

“There are certain things that all of us as individuals and companies as corporations have to buy and insurance is one of them. So it’s a natural for an insurance company to expand their footprint and relationship with customers,” Lucker said. “For insurance to be a portal into some of these other types of add-ons is really a powerful opportunity for insurance companies.”

Limited Opportunities

The outlook for the risk transfer business is not great. While some new business opportunities appear promising -- cyberinsurance, for example – the challenges might be greater, Lucker said.

“I really do think that it’s going to take some company … to basically say we can keep riding out these cycles for the next 100 years, but that’s not going to be transformative for our company,” he added. “It’s not going to differentiate what we do.”

While it might be well down the line, Carrier used the driverless car analogy to describe the business disruption that is coming across the insurance industry.

“The general consensus is that driverless cars are coming, it’s just a matter of when and how quickly,” he said. “When they come, there’s going to be a significant impact on the insurance marketplace. Companies have been slow to react to that threat. There’s hundreds of companies that write personal auto and they’re all going to be dramatically impacted and they’re all not reacting as fast as one would think they should be.”

The insurance company of the future could be one that offers “bundles” of services to middle-market clients, the survey concluded, such as security, employee benefits and traditional insurance.

“Once competitors start reinventing themselves to remain relevant and thrive in this rapidly evolving, ecosystem-driven era, the biggest risk middle-market insurers may ultimately face is standing pat and perpetuating the status quo,” the report authors said.

Additional Findings

Deloitte reported three additional key findings in the survey released Wednesday:

• Buyers want more diversity in core insurance plans. The most popular choices to bolster a carrier’s core value proposition included multiyear policies with known premiums, as well as risk management advice tailored specifically for their industry. Crisis management/recovery and cybersecurity services also scored high among buyers. Most agents said service options like these are so valuable that they think clients would be willing to pay additional fees to receive them.

• A clear path now toward strengthening insurer-buyer relationships. Many of the buyers Deloitte surveyed were enthusiastic about the possibility of establishing a much broader business services relationship with their insurance carriers.

• An appetite is growing for insurers that are also educators and consultants. At least one out of three respondents expressed interest in receiving educational and business networking services through their insurers. “Access to consultants focused on their industry” ranked highest, checked off by just over 50 percent of those surveyed.

However, respondents were much more interested in educational and networking services of all kinds—seminars or webcasts, peer exchanges, or research papers—when they were tied closely to their core insurance and risk management concerns.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.