Insurance agents can use these five tips to serve an underserved market — small business owners.As of 2014, the U.S. Small Business Administration counted 29.6 million small businesses, or those firms employing fewer than 500 employees, in the United States. For independent insurance agents, those numbers highlight a lucrative opportunity to sell everything from general commercial liability (CGL) policies to more cutting-edge coverages such as cyber risk insurance.
Many independent agents and brokers, however, overlook this underserved segment, Tom Barrett, President of the Midwest and Southeast regions of the Strategic Insurance Agency Alliance, told PropertyCasualty360.com. “One of the largest and most positive opportunities is to write small business insurance,” he added.
While the opportunity is there, selling insurance to small business owners also presents some special challenges for agents. For one, small business owners view their foremost priority as growing their business, leaving them with little time to meet with insurance agents. They tend to focus less on insuring any potential risks and more on increasing revenues on a daily basis. They also may consider insurance premiums as a sunk cost, not a vital risk-mitigation tool.
Cracking this marketplace, however, can be accomplished by savvy independent agents who understand small business owners because they, too, are small business owners. Using the following tips can help agents thrive within a sector that represents nearly $100 billion in premiums.
Research Your Community
As active participants in their communities, independent agents should be well-acquainted with other local business owners. Compile a list of potential small business clients from the local Chamber of Commerce, civic organizations to which you belong, or your book of personal insurance clients who may also own a business. From those sources, agents can reasonably expect to collect between 250 to 500 businesses within a 100-mile radius of their agency. Agents can further expand their base of clients by purchasing Internet leads within their targeted area.
Understand Their Risks
Simply having a list of potential small business clients won’t result in sales if you can’t understand each business owner’s unique risks. Before a meeting takes place, take the time research their operations to discover possible exposures. To gain further insights into a small business owner’s needs, interview others about their challenges. Carriers can also provide data on the top claims submitted by small businesses, recommendations for controlling losses, and general advice on serving the small business sector.
Sell Your Knowledge, Not Price
Armed with your research on your small business prospect, use your meeting with them to ask probing questions about how their business strategies to uncover any risks they may have overlooked. Rather than selling a policy based solely on the lowest price, discuss ways to minimize any possible losses through cost-saving and risk-mitigation measures. Employing this tactic positions you as an expert advisor, not just a salesperson out to make a sale.
While many carriers offer Business Owner Policies (BOPs), these contracts only provide general liability, property, and business interruption insurance. In many instances, a business owner may require other products, such as professional liability, auto insurance, workers' compensation, or health and disability coverage. As their agent, you can customize a package that handles all their insurance needs.
Boost Your Digital Presence
Social media is a great way to connect and build a relationship with small business owners, especially when you automate your marketing efforts with texts and emails. While small business owners appreciate a personal touch, they also expect their agents to have a robust digital presence where they can view their policies, pay their premium, or obtain a certificate.
Independent, locally based agents have a natural advantage when marketing to other small business operators who prefer working with a local person, not the call center of a major carrier. You are uniquely qualified to guide them through purchases and claims. The time is ripe to target this community and grow your book of business.