The small and medium-sized enterprise (SME) market offers significant opportunities - and challenges - for insurers.
With businesses coming in all different shapes and sizes, they demand personalised advice, control and convenience, and experiences that connect them with what they want, where, and how they want it, on their terms. But by understanding the pain points SME customers encounter when buying insurance, insurers are finding new ways to win trust and build loyalty, while delivering solutions that are unique to each customer.
Our research has shown that as many as 58% of SMEs are not insured against their top three risks, which has far-reaching consequences for both business owners and insurers. Underinsurance, fueled by a lack of true understanding of the business' cover needs, complex online experiences, and limited flexibility is one of the underpinning factors behind the sector’s imperative to adapt. The insurers able to respond to these challenges - at speed - will build loyalty and trust.
“Many business owners think they’re on top of their insurance needs, with our research finding 88% felt confident in their understanding. However, there’s a gap between that confidence level and the rate of underinsurance we’re seeing in the market. This highlights an education gap that needs filling, and insurers have a huge role to play.”
Glynn Austen Brown, Insurance Technology Consulting Partner at PwC UK
The role of ‘trusted advisor’ is where insurers can add tangible value. A third of business owners (33%) told us that an insurer’s expertise in their sector is a top factor influencing their decision-making, with only price and policy features ranking more influential.
According to Tom Brown, UK Insurance and Asset & Wealth Management Sector Leader at PwC UK, going beyond the traditional, transactional business model, and focusing on sector-specific knowledge and expertise is crucial for insurers to win business.
“This plays into the point around education. Business owners are often time-pressured and expected to be able to do multiple roles, so helping them understand exactly what insurance they need will help build trust and reassurance over the long term.”
Glynn Austen Brown, Insurance Technology Consulting Partner at PwC UK
More and more, businesses turn to online channels (46%) for their insurance needs, but offline channels such as face-to-face (11%) or over the phone (27%) are still popular, as SMEs look for guidance. By combining the preference for online channels, with bespoke content and information for each customer’s needs, insurance technology firms (insurtechs) are increasingly finding success with AI-supported chatbots. With SME insurance journeys taking, on average, 84 questions to complete, data-led solutions have significant scope to alleviate time pressures and improve the customer journey.
But it’s not only about channels and the way they interact with insurers, customers are also concerned with flexibility when it comes to their cover.
“Business owners are looking for policies to be adjustable to meet coverage needs over time, particularly those in the early years of business development. By having scalable solutions, and introducing subscription-based models, insurers can afford the flexibility demanded of prospective customers.”
Francis Templing, Insurance Technology Consulting Director at PwC UK
Delivering a good customer experience for SMEs goes beyond the transactional. It’s about offering more than a shelved policy that’s only there when things go wrong. Insurers that get this right will offer cover that is transparent, tailored and flexible, based on a foundation of quality data.
There’s also scope to extend the ‘touch points’ customers have with their insurance provider, offering support to build better relationships. This might include advice on business management, and convening a network of other small businesses with related and complementary services.
Offering practical tools around prevention - educating customers to stop things from going wrong in the first place - has a key role in developing the relationship between business owner and insurer.
The ability to adapt - quickly - is critical for insurers to meet customer needs. New solutions and new ways of working are required to meet the demands of the SME market. If they don't, their competitors will.
Technology offers incredible potential for insurers of small and medium enterprises (SMEs) as they look to find new sources of growth. New products, tools and services can lower barriers to entry, encourage innovation and improve efficiency. The data that comes with that technology offers a greater understanding of customer needs, wants and pain points.
But technology adoption alone is unlikely to bring long-term success. Insurers need to harness the power of insight, data and technology, if they are to deliver what SMEs need and build stronger connections that improve credibility and trust, and deliver sustained outcomes.
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