6 Ways Insurers Must Evolve to Help Small Businesses Navigate Emerging Risks

Meeting the risk management needs of today’s small businesses requires just as much finesse and sophistication as carriers tend to offer to large enterprises.  
By: | September 19, 2022

Insurance agencies and small businesses alike are facing a period of communication transition. 

Long gone are the days of picking up a phone or popping something in the mail to keep business flowing. Today’s world of text and email is all about brevity and efficiency. 

In the small business insurance space, the winners will be those who “don’t just digitize existing services, but who use digital engagement to provide value in new ways,” said Jeff Duncan, head of commercial lines, property liability at AmTrust Financial Services. 

“More and more customers are expecting not to just communicate with their insurers digitally, but that the digital channels can provide additional value to them well beyond just calling for an auto ID card or using an app to report a claim,” Duncan said. 

And a similar dynamic is required in the relationship between carriers and agencies. Today’s brokers and agents need to swiftly determine which carriers can offer the robust coverage their small business customers need.  

From launching API integrations for seamless quoting and binding interactions with agencies to offering a solid cyber insurance solution for small businesses, AmTrust Financial Services has invested in resources to help small businesses anticipate threats and develop their risk management strategies. 

“The future is not in reactive protection,” Duncan said.  

There are six ways small business insurers can make sure they avoid dismissing the needs of today’s small businesses.

Provide Malleable Solutions to Policy Service

Jeffrey Duncan, head of commercial lines, property liability, AmTrust Financial Services

Meeting small business insurance needs begins with understanding the requirements of agents and brokers. 

There is a common business model in the insurance industry among large carriers that relies upon agents using service centers operated by those carriers to manage their renewal book, Duncan explained.  

“One of our hypotheses is that service centers are often band-aids for poor technology, especially at a time when some carriers are pursuing direct-to-consumer models,” he said. “Agents are going to be increasingly concerned about the service center model, and who they allow their clients to be managed by, and how they allow that management to take place.” 

Seeing this trend, AmTrust is taking a malleable approach to policy service.  

By using application programming interfaces (API) and microservices, AmTrust has focused on providing a low-touch and cost-effective mechanism for agents to build their own customer experience for their clients.  

This allows agents to fully engage with AmTrust on their terms rather than being forced into a customer experience and process built by a carrier, Duncan said. “That said, we know that some agencies value the service center model, and we are exploring ways to meet that need,” he added.

Anticipate the Needs of Small Business

For Duncan, delivering value to customers begins with looking at how clients interact with a company, and then considering, “What is the need behind that request?” 

“We’re investing in both technology and in product innovation in order to not only meet today’s small business needs, but to anticipate and watch for the needs that continue to change in the future,” he said. 

As a well-known workers’ compensation insurance provider, AmTrust is aiming to broaden its known spectrum as a provider of comprehensive insurance solutions for small businesses — and in a holistic way, Duncan said.  

A critical part of knowing what small businesses need comes down to understanding the issues they are facing. Regulatory risks in the realm of workplace safety and cybersecurity are top of mind for Duncan. 

“The last two and a half years in the COVID-19 experience, we saw businesses caught between sometimes conflicting state and federal rules about, for example, vaccination and mask requirements.”  

“Small businesses are trying to run a business, and they don’t have a lot of time or resources dedicated to managing a very volatile regulatory environment.” 

“Another example is cybersecurity,” he continued. “As states and the federal government are starting to impose obligations on businesses with regard to how they hold customer data, or how secure their websites and other portals are, it’s not just good business to have an extremely secure portal or have confidence in your data retention capabilities, but now there’s regulatory risk, including potential financial fines around the failure to do that.”

Taking Care of Cyber Hygiene

AmTrust offers cyber insurance for major events, but sometimes it comes down to helping insureds manage their cybersecurity hygiene first.  

“Where I think the future lies is not just reactive protection, but in using technology to anticipate areas of risk in small businesses or in agencies, digital assets or IT infrastructure, so that long before a phishing attack occurs, you’ve identified the ways that it’s most likely to occur.”  

“Long before a denial-of-service attack occurs, you’ve identified the weaknesses in your architecture and ideally started to address them.” 

One of the ways AmTrust is evolving its product suite beyond insurance coverage is to better enable small businesses to evaluate their websites and their systems, and to proactively protect themselves.  

“Insurance is, by nature, a reactive product, but it need not be,” Duncan said. “Just like we engage in loss control for workers’ compensation and help small businesses understand how to better protect their employees so they avoid the claims in the first place, we’re looking at ways to do something very similar from a cyber risk perspective.”

Getting Ahead of Reputation Risk

Managing their online reputation is also top of mind for many small business operators. With vocal customers taking to the web to share their experiences with products and services of all types, businesses now face significant reputation risk, Duncan pointed out. 

“Great small businesses as well as great agencies are going to not just [hope] for quality engagement on review sites, but actively seek to cultivate the image they want through those review sites,” he said.  

“That means engaging on them as well. When somebody has a bad experience at your business, and inevitably that’s going to happen at the best of businesses, how you react to it … importantly, how you react to it on the review site can turn that into a powerful brand motivator, or conversely, it can harm your brand.”

Cultivating a Better Employee Experience

Labor shortages, wage growth and wage inflation have many small businesses looking more closely at the employee experience they provide. Organizations of all sizes are looking to foster opportunities for individual connection and cultivate a quality experience for employees. 

“In an environment of massive labor shortages that’s leading to wage growth, wage inflation, and a really competitive market for labor,” Duncan said, “the best employers are going to be thinking not just about wages in isolation — even though that’s an important part — but about overall employee experience.” 

“While very large organizations have the resources to invest heavily in the employee experience, small businesses probably do not have quite the same level of resources, but they do have the individual connection with their employees,” he said. 

AmTrust is positioning itself to provide small businesses with insight toward cultivating improved employee experiences in tandem with cultivating quality customer experiences.  

“A way to keep your employees for the long term, a way to attract them and keep them, is to make your workplace a lot more engaging to be in,” Duncan said. Ultimately, this translates to customer experiences. 

Provide Service within Reach

As seamless as digital engagement with agencies handling small business insurance could become, times will arise when a situation is specific enough for a phone call. And carriers working with small businesses must be able to get someone on the phone to help an agency clear the roadblocks to coverage for their clients.  

“Because we’re so focused on the small business space, and because we’re a relatively young and flat company, agents that do business with us have a high degree of access to all levels of the organization,” Duncan said. 

“There’s a lot of small agencies that somebody goes out and hangs a shingle on a storefront and tries to make their way in the world,” he said. “We’re barely 25 years old ourselves and we can empathize with that entrepreneurial spirit.” & 

Raquel Moreno is a staff writer with Risk & Insurance. She can be reached at [email protected].

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