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Small commercial is redefined: insurers who open up eligibility, thresholds for the small commercial market allow themselves--and their partners--to accommodate a larger chunk of that market.

Listening and responding to the market is not always easy. But insurance companies that want to stay ahead of the curve know they need to evaluate their business at regular intervals and make the changes their customers and agents want.

When it comes to making it easier and more efficient for agents to write commercial business, insurers that ask the right questions and listen to their sales force and employees are coming up with ways to be more flexible and efficient. The aim is always increased satisfaction with the process, and ultimately, more business.

Leading insurance companies that have put in place feedback mechanisms with their agents and employees, including surveys and interviews, have recently found that it makes sense to more broadly define the scope of their small commercial market to help agents take advantage of more of this growing market segment. The total number of small businesses in the United States increased by approximately 71,500 in 2003, by 98,500 in 2004 and by some 127,000 in 2005, according to the U.S. Small Business Administration. By opening up eligibility thresholds for the small commercial market, insurers and their partners might accommodate significantly more of that market.

In recent years, insurers have begun defining small commercial business by their own underwriting process; very small businesses that can be underwritten with automated technology applications; traditional small accounts that require some underwriter review; or expanded risks that require detailed review and analysis. In practice, however, it's the agent who needs to determine the best outcome for his or her client. Insurers need to assist agents by making clear how their underwriting process works and the choices agents have in submitting new business.

When it comes to small commercial business, the voice of the agent is clear: Simplify with rapid submission, firm quotes, fast response and comprehensive coverage. Neither agents nor their customers can afford to labor over complex quoting and underwriting procedures.

For many agents, the more expansive the insurer's definition of small commercial, the better--as long as the process remains quick, easy and efficient. By increasing the eligibility limits for small business for accounts that do not require extensive underwriter involvement, agents can take advantage of the efficiencies offered in that class of business for more new accounts. That means faster, more efficient work flows to close more accounts on a broader scale.

Finding the right balance of flexibility, efficiency and ease of doing business isn't simple, hut it isn't rocket science, either. Smart insurers frequently ask the people on the front lines of the business how well their underwriting guidelines and business models are performing. That evaluation provides a cohesive blueprint to develop plans to enhance their underwriting models, increase satisfaction with their partners and improve the bottom line.

At the end of the day, every agent needs to choose what's best for his or her customer. It's up to insurers to understand the varying needs of agents and businesses and respond with competitive choices and flexibility.

Jonathan Bennett, a Best's Review contributor, is executive vice president for personal and small business insurance at The Hartford Financial Services Group Inc. He can be reached at
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Title Annotation:Property/Casualty: Underwriting Insight
Author:Bennett, Jonathan
Publication:Best's Review
Date:Nov 1, 2007
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