In November, the U.S. affiliate of Bermuda-based Hiscox Ltd. began offering what it claims is the first direct property and casualty for small business sold online, which it says allows businesses to obtain a policy far faster than they could through the traditional channel of brokers or agents.
Connecticut and New York are among 21 states where Hiscox has begun selling policies, targeting its marketing efforts toward business services such as information technology, consulting and marketing companies.
The company is offering policies covering general and professional liability, workers compensation (underwritten by Employers Holdings Inc.), and business owners”™ policies covering losses involving buildings, inventory or the loss of electronic data.
While small businesses often price check insurance quotes online ”“ an average of 135,000 keyword searches are performed monthly in the United States ”“ Hiscox maintains that until now business owners have been unable to complete a purchase directly from a carrier using the Web.
The company said it has signed up 38,000 customers in the United Kingdom since offering coverage there five years ago, and attributes the gains in part due to business owners conducting other types of transactions online, including purchasing auto insurance and other personal lines.
Those policies, of course, do not typically carry the complexity of a business liability policy ”“ and insurance agencies have survived the Internet era in part by convincing customers they offer hands-on expertise and responsiveness that an insurance corporate call center cannot replicate.
Still, Hiscox cites an Interbrand study it commissioned in 2009, in which more than half of small business owners surveyed said they would be comfortable purchasing business insurance online.
Kevin Kerridge, head of Hiscox”™s U.S. sales operations in New York City, said other insurance underwriters have likely avoided selling directly online due to the relatively small premiums that accompany small business policies.
“When I book a vacation I go to Expedia; when I buy a book I go to Amazon,” Kerridge said. “It”™s amazing to think that there”™s this void.”
The speed of the transaction may be the primary selling point ”“ particularly for small businesses that must prove they have insurance coverage as a prerequisite to winning business from a larger subcontractor safeguarding against liability. Connecticut and other states have signaled intentions to step up spot-inspections of workers compensation coverage. Under Connecticut law, the state can suspend work at a site until proof of workers compensation insurance is produced.
Kerridge said that it takes just minutes to fill out required forms online and obtain a binder that confirms coverage exists for a small business.
For the time being, Hiscox is not offering commercial auto insurance, but does not rule out doing so in the future depending on demand for its initial online offerings in the United States.
