Integrate systems. Simplify the business process. Improve the profit. That's what commercial agents need from their insurers.But they aren't getting that kind of support, particularly for small commercial coverages that generate 10% or less in commission, says Donald E. Martin, founder and former chief executive officer of Cal- Surance in Orange, Calif., one of the nation's 50 largest agents and brokers and now founder of EPolicy.com.
The problem isn't the complexity of the coverage, he explains. It's the lack of efficiency in the manual marketing and delivery process. And the solution may be a combination of automated underwriting along with the powerful communication technology of the Internet.
"Look at the submission, underwriting and policy delivery process as we have all known it," he explains. "From the first request for coverage to the moment of handing over a policy, an agent can go through as many as 20 separate steps. By the time you receive the policy, you may have been working on the file for 30 to 60 days," he explains.
Reducing the number of steps
"The way to make small-business and other thin-margin coverages profitable is to reduce the number of steps and the delivery time for small commercial customers and their agents-to cut the built-in expense of service down to an absolute minimum."
Martin started addressing the problem two years ago by stepping down from the top job at Cal- Surance and founding his new company in Torrance, Calif. In March, the company announced plans to ink deals with small-business and professional liability insurance underwriters, agents and brokers and business owners using the Internet and the latest online quotation technology.
Charter insurers participating in the launch included Fireman's Fund Insurance Co., Kemper Casualty, TIG Specialty Insurance Solutions and the Interstate Insurance Group. American International Group, St. Paul Companies and four other leading insurers have since joined the carrier pool.
The company first tested its Web-based system, at www.EPolicy.com, with professional liability programs for more than 300 small businesses and occupations and has since expanded to include workers' compensation coverage and business owners package policies.
"What we have done is use automated submission and rating and the Internet to streamline the process of purchasing business insurance," Martin says. "We have essentially cut down the 20-step process to five steps or less and reduced the time from a month or more to a matter of minutes."
EPolicy.com provides the up-front integration for insurers by functioning as a managing general agency with underwriting authority for its participating insurers, thereby automating the underwriting process for its selected classes of business.
By accepting underwriting authority from insurers, the company doesn't need to lean on their internal underwriting systems for application and policy processing. Epolicy.com controls the process with its own proprietary patent-pending technology.
Martin says the automated process reduces the underwriting and policy delivery expense by 15% to 20%, which is returned to the participants. The business owners policy coverage is presently discounted by 15%, providing agents with a competitive pricing edge, and business owners a reason to purchase coverage directly from EPolicy.com.
However, Internet shopping for commercial lines is not for all small-business buyers, Martin admits. The company targets businesses and professional firms with 25 or fewer employees and total annual insurance premiums of $3,000.
Martin says agents who participate in ePolicy.com will not only be able to more efficiently service their existing small-business customer, but also expand their penetration into a market he estimates to be more than 26 million individual businesses paying nearly $100 billion for insurance services.
