The Future of Direct Commercial Insurance Is Mobile

  • By
  • Barry Mueller
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  • May 23, 2019
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Intro

As part of the growing direct insurance market trend within the commercial space, we’ve researched 10 companies that have already launched direct insurance. This list includes AllState, American Family, biBERK (a Berkshire Hathaway Company), Hiscox, Markel, Nationwide, Next Insurance, ProSight Direct, RLI, and Starr Insurance. All of these insurers are targeting the small-business segments where the decision makers are in fact the business owners themselves.

Traditionally, the distribution channel for small-business customers has been through agents. However, today’s business buyers are increasingly self-directed, according toForrester. 60% prefer not to interact with a sales rep as their primary source of information, and 68% prefer to do research online on their own.

Many of these business buyers are researching insurance  not just on a desktop computer, but also on mobile devices. The Pew Research Center points out that adults over the age of 50 have increased mobile adoption by 20% in the last three years alone. This is important, as Experian reports that the average age of small-business owners is 50.3 years old.

In this short article, we will discuss the importance of considering a mobile strategy as part of commercial insurance direct-to-consumer operations.

Mobile Traffic Is Constantly Increasing

Steve Jobs revealed plans for the iPhone 12 years ago. Since then, global adoption of smartphones has risen, and not surprisingly, so has mobile traffic.

53% of all internet traffic comes from mobile devices, according to Wolfgang Digital’s KPI Report 2019, which analyzed 250 million website sessions. Just two years ago, only 43% of traffic came from mobile devices.

Moving forward, mobile data traffic will be almost three times  the amount it is today by 2021, according to the Ericsson Mobility Report. Furthermore, mobile retail sales are predicted to grow 10% by 2021, according to BigCommerce.

In 2017, the Boston Consulting Group (BCG) conducted a survey about “Mobile Marketing and the New B2B Buyer.” B2B mobile leaders are generating higher levels of mobile engagement, as measured by search queries, site traffic, lead generation, and transactions. They are ultimately seeing a greater share of revenue that is mobile driven or influenced—42% on average.

According to Google Internal Data, 50% of B2B search queries in 2017 were made on smartphones. BCG expects that figure to grow to 70% by 2020.

All in all, businesses are increasingly using mobile, and those numbers will continue to grow.

Personal Auto Insurance and Small Commercial

McKinsey points out that the small commercial insurance customer decision journey parallels the personal auto insurance journey in striking ways. According to the report, shopping and retention dynamics are roughly the same. In addition, both lines of business have a similar proportion of customers who are “actively loyal,” meaning they are willing to recommend their current carrier. These are the best type of customers, since the cost of acquisition via word of mouth is minimal to none.

Since there are no studies relating to the mobile commercial direct insurance journey, here’s a peek at a study that highlights auto insurance and mobile users. Facebook and comScore reported that 61% of the respondents believed research to be important before selecting their provider, but less than half reported that they actually purchased auto insurance online.

Carriers that already have direct auto insurance operations might want to consider tapping into the direct-to-consumer channel in the small commercial space due to their accumulated experience and expertise.

Mobile Ads Are Cheaper

Insurers looking to get the attention of small businesses online through desktop or mobile need to leverage their brand names and use online ads that target small businesses.

Research conducted by WordStream, a software and service provider for online ads, has shown that in the financial industry, mobile cost-per-click (CPC) ads on Google search are 16.57% cheaper than desktop ads. Similar metrics were revealed for Google’s Display Network, in which mobile CPC ads are 19.77% less expensive than on desktop.

Out of the 10 carriers that we researched,  none currently have a mobile app on US Google Play or Apple’s AppStore. All of the carriers’ websites are mobile friendly, with a responsive design and portals.

Although conversion rates may be better on desktops, (typically 1.6% according to WordStream), the mobile channel can play an important role in the entire acquisition process.

One company that capitalizes on mobile traffic at the moment is Next Insurance. In their 2018 midyear report, the company announced that 50% of their customers bought their policies on their cell phones. Even if Next Insurance is taking advantage of more-favorable cost-per-clicks for mobile, the fact that 50% of its customers are buying on mobile reveals that many small businesses are comfortable with this channel.

Conclusion

Carriers leveraging personal auto insurance have already seen success when creating an optimal mobile experience. Commercial insurance carriers are also starting to enter the direct-to-consumer market. As they enter the market, they should keep in mind the importance of mobile, as it  is still an untapped market with a lot of potential and interesting opportunities. As technology evolves and underwriting data becomes more available than ever before, making the submission process more succinct, the mobile experience will become simpler and submission and conversion rates will keep growing.

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