March 2020 – 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.

Key Points and Findings

• 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