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Building new ecosystems in middle-market insurance

Insurers should fortify middle-market accounts

With turnover on the rise, many middle-market commercial insurers are looking for new ways to maintain and expand penetration and retention rates in an increasingly competitive, cost-conscious environment. Looking ahead, competition for this segment is likely to intensify.

This article examines results from a survey conducted by the Deloitte Center for Financial Services on insurance buyers and outlines opportunities for insurers to capture market share and improve retention rates via product innovation, segmentation, and bundling.

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Insurers should fortify middle-market accounts

Bundling could raise the stakes for price shoppers

Many middle-market commercial insurers are looking for new ways to maintain and expand penetration and retention rates in an increasingly competitive, cost-conscious environment, with turnover on the rise. Indeed, at least one-quarter of buyers surveyed by the Deloitte Center for Financial Services had changed one or more of their carriers in the prior 12 months, while over two-thirds had switched at least once in the past three years. 

What do buyers think about expanded services?

To understand the evolving attitudes, expectations, and needs of middle- market insurance policyholders, Deloitte surveyed 800 buyers in this segment, spread evenly across five industries and four business size categories.

Insurers have options to achieve preemtive differentiation

Buyers appear open to receiving broader business services

Middle-market carriers, along with their agents or brokers, often provide a range of insurance-related services to help policyholders prevent or at least limit potential losses, as well as facilitate claims handling should an event occur. This is typically an important element of an insurer’s relationship with many buyers. For example, 55 percent of those surveyed by Deloitte cited risk management services as a key factor influencing their insurance purchase and renewal decision—the second most chosen option, topped only by the price of the policy.

 

Bundling, networking may become the ultimate differentiator

If you build it, will middle-market buyers come, and will they stay put?

Creating and maintaining a more comprehensive business-support ecosystem, with an insurer as its hub, will likely require carriers to expand beyond long-established comfort zones and implement creative fulfillment strategies.

Intermediaries play a key role in cultivating a new ecosystem

Last but not least, to effectively execute this business model transformation and launch a new ecosystem, middle-market insurers will most likely need to get their agents and brokers solidly on board.

 

Moving forward: Where should middle-market insurers go from here?

There are a number of questions carriers should address as they consider becoming a hub for a broader range of services, or whether to join someone else’s network. Insurers will likely need to resolve these issues before proceeding with a nontraditional services-oriented transformation. 

 

Read the report to understand where middle-market insurers can go from here and what changes may be necessary to effectively execute a new game plan.