Direct Online Small Commercial Insurance Market Poised to Grow to $12B by 2025

With an onslaught of InsurTechs and activity from major insurers, commercial lines is starting to go direct: Novarica report

Boston, MA (Mar. 3, 2020) – Over the past decade, selling small commercial insurance directly online to customers has gone from an outlandish idea to a reality. In a new report, Direct Online Small Commercial Insurance: 2020 Update, research and advisory firm Novarica projects significant growth in the market as InsurTechs and major carriers alike try to serve America’s 30 million small businesses online.

“Novarica predicts that the market size for direct online sales of small business insurance will increase to $3.7B by end of 2020 and could grow to $12B by 2025,” said Matthew Josefowicz, President and CEO, and lead author of Novarica’s new report. “Given the underlying demographic and technological conditions, commercial lines insurers who are not already active in the direct sales space should consider their strategy now and make necessary investments in technology.””

Among the key findings of the report are:

• Sales in 2019 were slightly less than expected, indicating the challenges of the direct small commercial market, even for established players. However, the underlying market factors for the sector are solid, and given recent activity Novarica expects future growth.
• The best opportunity is the middle 60% of small businesses. Very small businesses are unlikely to be profitable for insurers, and the largest accounts are accessible by traditional channels.
• Insurers continue to enter the direct small commercial market, including large insurers who have launched quoting and sales tools as well as regional insurers who have launched line-of-business-specific direct sales arms.

Click here for the table of contents or to access the report.

Report Summary

InsureTechs and major carriers are moving into direct online sales for small commercial insurance, which Novarica projects could be more than 10% of the total market by 2025. Although sales in the market grew more slowly than expected in 2019, the year was nevertheless active for many insurers entering the space. Novarica remains confident that the direct small commercial market is primed for growth.

This report updates and expands on Novarica’s 2019 update to its report series on direct online small commercial insurance.

Click here for the table of contents or to access the report.

About Novarica

Novarica helps more than 100 insurers make better decisions about technology projects and strategy through retained advisory services, published research, and strategy consulting. Its knowledge base covers trends, benchmarks, best practices, case studies, and vendor solutions. Leveraging the expertise of its senior team and more than 300 CIO Research Council members, Novarica provides clients with the ability to make faster, better, more informed decisions. Its consulting services focus on vendor selection, custom benchmarking, project checkpoints, and IT strategy. For more information, visit www.novarica.com.

Source: Novarica