The market size of property, casualty and direct insurance was a trillion dollars in 2024. Its compound annual growth rate (CAGR) has been 2.5% since 2019. Despite market strength, competing in the property and casualty (P&C) sector is becoming more difficult, particularly for smaller insurance firms and managing general agents.
Scaling strategies for small insurance companies often hinge on using property and casualty insurance software and other insurtech solutions. P&C companies must aim for maximum revenue growth with minimal expenses to be profitable. That means maximizing the talents of existing employees using a software solution that enables full policy lifecycle processing.
What Is a Scaling Strategy?
Growth often means an equal increase of costs, which is not optimal. Instead, scaling is a way to grow smarter, not bigger. A scaling strategy is a business plan to increase a company’s reach and revenue, with fewer costs.
For instance, a small insurance business may wonder how they can write more policies without hiring more underwriters. The solution is the right policy administration software that enables efficiency, thereby reducing the need to hire more employees, such as developers.
In general, a wise scaling strategy for insurers will increase business output with a high return on investment (ROI). It will also provide a simplified system for running the operation.
How Can a Small Insurer Compete Against Large Insurance Companies?
To effectively rival bigger insurance firms, small insurers and managing general agents need to implement the following strategies for maintaining an efficient, cost-effective business model:
Maximize Existing Staff
As mentioned earlier, having the right property and casualty insurance software will reduce the need to hire more people. You’ll want to work with an insurance software company, like Modotech, that focuses solely on P&C insurance for personal and commercial lines.
Modotech’s Internet Solutions for Insurance (ISi) is the right insurtech solutions software because it eliminates the need to hire more underwriters, accountants and customer service representatives.
Straight through processing of tasks is a no-hands approach, and instant communication across departments and users make the underwriting process and changing policy information easier and faster.
An insurance agent can quote instantly, send policies to the carrier for underwriting or overrides and issue policies much quicker than a legacy insurance system would allow. ISi’s underwriting automation tools also reduce human error.
Templates for invoices and letters allow agents to perform tasks with little effort and time spent. Customers have their own policy portal, where they can make certain policy changes and payments, thereby reducing the need to hire more customer service representatives.
Payments are automatically posted to the general ledger and balances are updated, reducing the need to hire more accounting personnel as your book of business grows.
Increase Efficiency
Be more efficient as your organization writes more insurance policies and handles more customers and agents. Efficiency will save you down the line in lower hiring costs, too.
Fast quoting, quote retrieval, accurate billing, declarations-page generation and other tasks will be more efficiently performed if the carrier or MGA has software with the right automation tools. For underwriting automation, a software with accurate rating tools that utilize the company’s rating manual is a must. ISi is all those things and more.
An investment in ISi is a scaling strategy, a business plan to increase a company’s reach and revenue, with fewer costs.
Update Systems and Processes
Many small insurers are using legacy systems that do not utilize the internet. Therefore, they do not have an all-in-one quoting, binding, accounting, underwriting and claims management under one roof.
With one ISi, legacy insurance system modernization is simple, and activation will not disrupt your business’s workflow.
Software as a service (SaaS), may lock you in and make you feel like you’re not in control of the system and its updates. Also, SaaS offers very limited ability to customize your company portal, the agent portal and customer portal. ISi allows clients to customize what agents see, and the policyholder portal is on a separate database, to keep sensitive information secure.
Modotech’s ISi digital insurance platform is the superior alternative to SaaS solutions and it may have a higher ROI. It also provides a smooth transition from outdated systems, so that workflows are not disrupted by updates and incompatibilities. Easy third-party integration with insurance vendors is another important feature of ISi, which was created solely for P&C insurance businesses in mind.
Best of all, small insurance companies and MGAs do not need to rely on developers to use ISi, which is an intuitive system that only requires basic training and includes ongoing client support.
Amplify Your Brand
Take the time to understand how LinkedIn, even Facebook and Twitter work, so you can reach more insurance shoppers. You may also advertise on those social media channels or even buy radio spots on local radio shows in your specific coverage areas.
There will be costs associated with insurance marketing, and replacing your marketing budget with buying insurance leads for your insurance agents is another viable option for scaling.
There will always be a customer acquisition cost (CAC), so a small insurer must increase the lifetime value (LTV) of their existing customers to compensate. ISi’s customer management features allow insurance agents to nurture these relationships with more efficiency. Not only will you retain customers, but you can ask them for referrals to their circle of friends and family.
Retrieving quotes is easy with ISi, so agents have a second or third chance at writing new business for older leads. ISi makes it easy to follow up on quotes they didn’t close the first time around.
Improve Customer Service
So much has been written about how technology is transforming the insurance customer experience. Digital customer service is accelerating P&C insurance sales and allows customers to self service, but insurance customer management still requires the human touch that only insurance agents can provide.
Automated tasks associated with quoting, policy inquiries, invoicing and billing allow your insurance agents to spend more time connecting with existing customers. It takes time and effort to retain their business while following up on prospective customers shopping around for insurance.
Cross-selling and upselling are also important goals for insurance agents while maintaining existing relationships and forging new ones.
Expand Horizontally
Utilize new technology for growing an insurance business, but recognize that there are some traditional growth strategies that are useful too, one being horizontal expansion.
Expanding horizontally means aligning company goals with those of other finance and investment professionals to provide clients more services and products.
For instance, an MGA may grow horizontally by merging with a finance brokerage to write more business without adding any overhead. Modotech’s software, Internet Solutions for Insurance (ISi) would, in turn, help maximize the MGA’s existing talent.
Expanding horizontally can also mean offering more products, like home insurance, if you currently only sell car insurance. Or, offering specialized coverage for classic and collectible cars if you only cover high-risk drivers. Adding RVs to a personal lines business is another way for P&C insurers to grow.
As you grow, your insurance software must be able to grow with you, without a hitch. ISi can help you tailor your insurance administration needs as they change.
Be Agile
Having regulatory agility and being able to quickly launch new products in new states is important, and a compliance automation tool in insurance software is vital.
It’s also important for small insurers to break silos and promote enterprise-wide agility by forming smaller, non-hierarchical teams and working across departments.
For example, insurance agents and underwriters should be able to transfer policies to one another seamlessly. An insurer’s IT department should work with an insurance software vendor, like Modotech, instead of hiring software engineers and developers. Because changes in the system are made using tables, not code, they are easy to do and take effect right away.
Issuing fast, accurate quotes and making sound underwriting decisions should also be a priority if scaling is the desired outcome. Being fast and accurate means having to take fewer steps in signing off on projects, hence more accountability for each member of the agile team.
According to McKinsey & Company’s insights, agile companies’ employee engagement and customer satisfaction scores improved, and they operated five-to-seven times faster than companies with more rigid corporate structures.
Let Modotech’s ISi Help You Scale, Not Just Grow
Modotech empowers smaller P&C insurers and MGAs with easy-to-use technology to streamline processes and improve communication across departments, thereby creating efficiency and accuracy. ISi’s intuitive digital insurance tools are combined in an all-in-one insurance software solution that enables a full lifecycle workflow without hiccups.
Automated tasks enable a small insurer to focus on customer service and retention. With less time spent on policy administration and claims processing, an insurer or MGA can spend more time on marketing their products and services to insurance shoppers to create new business.
With many of their job functions automated, insurance agents can focus on customer retention, upselling and cross-selling insurance products as well as quoting prospects.
See what ISi’s time-tested features can do for your enterprise. Book a demo today!