Meagan and John here. Today we’re going to talk about how MCA thinks about the small commercial marketplace.
In today’s environment, small commercial is getting increasingly complex. The way that we like to break this down is we think about the amount of underwriter touch.
So, from no touch, which would be straight through processing, to high touch, where you’re having an underwriter fully review an account. We also like to think about the complexity of the risk. Is it low? Very similar to a lot of the other risks you see. Or is it high complexity where you really need that underwriter touch? Across the spectrum we have this curve, we have our portfolio management on one side and underwriting on the other side. To succeed in the space, understanding where you follow process curve is important in defining your strategy.
John, given the varying degree of complexity for small commercial, how should carriers think about being competitive in the marketplace. So really, the first step is to make sure you have a clear and defined strategy and knowing who your target market is. Once you have defined that strategy, the reasons why that’s your strategy and you know your market, then you can align your core capabilities to be successful in that space.
So underwriting discipline, pricing sophistication, technology both internally and externally facing. All those needs differ based on where you align on this curve and your target market. It is very different in commercial lines where the risks aren’t homogeneous at all. We see a lot of carriers today moving into commercial lines or looking to grow their commercial lines book for a variety of great reasons.
They’re diversifying away from personal interests that have been challenge profitability wise the past few years. They’re looking to offset some reinsurance costs on the property side or even than just looking to grow their revenue stream in a market that has been historically profitable. These are all great reasons to attack the commercial line space, but they all can lead to different conclusions on who your target market is and how to go about attracting that business.
In this series, we’re going to go in-depth in the small commercial space and talk about what carriers should consider when defining their strategy.