The old ways of transferring and sharing risk—methods that had guided underwriters for centuries—suddenly seemed uncertain.Two decades later, I find myself witnessing another kind of upheaval. Only this time, it’s not a crisis shaking the foundations of insurance—it’s technology.As a partner at McKinsey, my focus is on helping small commercial insurers navigate this new world. What I see now is a transformation just as profound as the one that followed 9/11—but driven by data, automation, and digital innovation rather than loss and instability.
For years, regional and mid-sized carriers managed to avoid the worst of global market volatility. But that buffer is fading. Today, data analytics, artificial intelligence, and straight-through processing (STP) are redefining how insurers operate—from underwriting and pricing to distribution and claims. Efficiency has become the defining edge of competition.
After spending the past year speaking with hundreds of carriers, brokers, MGAs, and small-business clients, four key themes have emerged that are shaping the next era of small commercial insurance.
1. The Game Has Gone Digital And It’s Moving Fast
There’s no denying it: small commercial carriers are finally catching up to their personal lines peers in digitization. 1 .The goal isn’t to replace people—it’s to remove friction. Every part of the customer journey, from quoting to claims, is shifting toward digital-first experiences that are faster, more accurate, and more intuitive.
What’s fascinating is how collaboration is driving this change. Insurers are no longer treating insurtechs as rivals. They’re inviting them in as partners experimenting together with predictive analytics, automated underwriting, and customer platforms that make binding a policy as easy as booking a flight.
A conversation I had recently with the president of a Midwestern independent agency stuck with me. He’s wrestling with how to bring technology into the specialty casualty market—one of the most complex and fragmented areas of insurance. Unlike property or auto, casualty coverages don’t lend themselves to standard templates. Yet, with smarter data tools and AI modeling, even these intricate coverages are slowly becoming more manageable.
2. Insurtechs Are Building Bridges, Not Breaking Them
In many industries, digital start-ups enter the scene with one mission: to disrupt. But insurance is different. Most insurtech companies aren’t trying to replace traditional carriers—they’re working to strengthen them. McKinsey’s research shows that around 61% of insurtechs focus on empowering the existing value chain rather than competing against it.
This collaborative mindset is reshaping the industry’s story. Where once there was tension and skepticism, now there’s partnership. Carriers are co-developing new tools with tech firms that bring modern capabilities AI-based loss prevention, API-driven policy systems, and real-time risk dashboards to markets that used to run on spreadsheets and experience alone.
It’s less about tearing down the old guard and more about evolving together. The future of digital transformation in insurance is being written not by outsiders, but by teams of innovators and incumbents working side by side.
3. Customers Want Every Channel And Still Want a Human
Today’s small-business owners are hybrid consumers. They want to research online, ask questions over the phone, and still have the option to sit across the table from someone they trust.
Our data backs this up: nearly 70% of small commercial customers use multiple channels when exploring coverage optionsvisiting websites, chatting online, and calling service centers. But when the moment comes to buy, 82% still prefer to finalize with an agent.
That’s not a contradictionit’s human nature. Small-business insurance is complex. Policies differ by industry, size, and risk profile. Owners want to be sure they’re covered correctly, and for that, they turn to people they trust.
For insurers, this means success lies in seamless omnichannel experiences—systems that let customers move effortlessly from digital to human touchpoints. Whether a business owner begins with an online quote, asks questions over chat, or finishes the process in person, every interaction should feel consistent, efficient, and personal.
4. Agents Remain the Beating Heart of Small Commercial
If digital technology is the nervous system of modern insurance, agents are still its beating heart. Despite the march toward automation, this line of business remains deeply relationship-driven.
The explanation is straightforward: small business insurance has a wide range of applications. Every one of the hundreds of company classes has different risks, legal requirements, and coverages. The situation gets considerably more complicated when you include markets for surplus lines and errors and omissions (E&O).This intricacy is interpreted by agents. They assist entrepreneurs in managing risk, avoiding blind spots, and selecting coverage that suits their needs rather than just their financial constraints. The carriers that enable their agents with real-time insights, sophisticated quotation tools, and predictive analytics—providing them with the speed of digital without compromising the depth of human understanding—will be at the forefront of the industry in the coming ten years.The Path Ahead: Combining Technology and Trust
The small business insurance market is at a turning point. Who can mix efficiency and empathy is the question, not who can automate the process the quickest. The following carriers will be the next generation of winners:
Intelligently automate so that people may concentrate on relationships and giving advice. Collaborate strategically with insurtechs to get new knowledge and efficiency.Provide really multichannel experiences that let customers choose how they interact. Give agents the tools they need to service more quickly, intelligently, and individualizedly. In the end, technology will not replace people in the small business insurance industry; rather, it will enhance human skill. In addition to surviving the digital age, the carriers who achieve that balance will help shape it.
