When the economy cools down as it has in the last few years, small businesses typically are the first commercial entities to reduce costs, with many scaling back expenses such as comprehensive business owners insurance.These tactics might help foster cost-containment, but it's a negative development for insurers, agents and third-party providers of small-business insurance that want to build new business. But low demand isn't the only challenge that they're encountering in the small-business market. One chronic dilemma has been an inability to precisely pinpoint insurance needs of small businesses, many of whom are fitted with either too much or too little coverage.

With this one-two punch staring them squarely in the face, providers nevertheless remain optimistic. The emergence of real-time data exchange efficiencies via extensible markup language (XML) helps lure agents who are now able to furnish a customer with multiple quotes in one search. Moreover, independent agents who lacked the volume requirements to work with large insurers now have easier entrée via third-party distribution outlets.

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