Small Commercial Insurance Trends In 2021

Despite the pandemic, small commercial is incredibly hot right now. Most likely this is due to an increased focus on bringing offline processes online, and this is the lowest-hanging fruit available in the small commercial space. 

This has been a busy sector of the commercial P&C market in the last 9 months. Let’s take a look and see what’s happening in this space.

Nobody wants to touch it

The key to small commercial profitability is that you can’t touch it much or it becomes unprofitable for a long time (because the premium is so low). So there’s a real advantage in being able to provide a great customer experience in a scalable way.

Some carriers are seeing success in setting up service centers for agents and retaining a few points in commission for the service. Some agents are automating it themselves.

Carrier portals left behind for API’s

The trend around five years ago was to set up a carrier portal, often focused on ease of use. There was a huge first mover advantage in this, and the carriers that were able to move first enjoy a stickiness that is almost impossible to replicate for newcomers.

The late adopting carriers who set up carrier portals later are finding that change management at agencies is hard and adoption of their carrier portals is harder still. Changing the behavior of CSR’s is incredibly difficult, and most agency CEO’s struggle to do it effectively.

The first movers are happy with the current situation, everyone else is now scrambling for a solution. And all roads lead to API’s to connect to digital distribution.

API’s becoming table stakes

Everyone is connecting to API’s. There are many companies out there who connect to API’s to provide what is effectively a comparative rating service to agents. Most notably, agency management system vendors. And when these agency management systems have the ability to connect natively, it will challenge the small commercial rating systems to provide value outside of simply a connection to get a quote. 

Either way, it will be a race by the carriers to connect the distribution systems with the most flow to sustain growth. Industry API standards are sure to emerge, and carriers that can’t adapt quickly will see their premium volumes quickly dwindle.


Amidst the rush to automate everything, the best agencies are focusing on specialized programs based on unique data and strategic partnerships. They are being opportunistic and finding partners with large groups of policyholders, usually in a specific class, and creating a great customer experience specifically for them.

The most sophisticated agents are partnering with distributors, associations, retailers, and others to get access to proprietary flow as well as proprietary data sets (schedules, account history, activities, etc).

New MGA’s are dominating SEO and online marketing

The first movers in online marketing were, not surprisingly, startups. MGA’s and niche carriers have enormous head starts on traditional agents and carriers, and are making it difficult to compete on customer acquisition costs for new entrants and carriers.

Automation and API’s are slowly creeping up-market, into middle-market

Automation and API’s happened first in middle-market. Then they came for small commercial, and are eating it one class at a time in many carriers. Carriers that have already automated a BOP are moving to work comp, and those with automated work comp are automating commercial umbrella. 

The march towards automation will continue until the simplest lines of business have all been automated, and this needs to be considered in every carrier’s strategic planning.


The data edge in insurance

I’ve had the pleasure of being in a few different industries now: call centers, industrial machinery, and now insurance. It’s always interesting to try to observe not just the differences between them but also their similarities. Specifically, the similarities in how these different industries are incorporating data into their vertical stacks.

Within insurance, data has probably a more direct impact than any other I’ve seen because it’s based almost entirely on math, at the end of the day. You have to take in more than you pay out.

Here are a few areas where there is just so much potential for data in the insurance industry, and some interesting things different people are doing with it.

Using data to underwrite better

Boils down to taking more good risks than bad

  • classic data science application, write algorithms that are smarter
  • finding completely new sources to use such as drones, sensor data, and social media profiles
  • partnering with third parties who have exclusive access to useful data including personnel histories, vehicle location, business profitability, and more

Ultimately all of those come

sources of proprietary loss data


  • Lack of a process for figuring out how to use new data sets
  • Getting new data sets into a data lake

Using data to simplify insurance for the consumer

Prefill data etc

Using data to simplify insurance for the consumer