Global Digital Small Business Insurance Survey

This time its personal: A global survey of 2100 small businesses to identify attitudes towards using digital to buy and serve their insurance needs.

How fast is SME insurance moving towards Retail and what are the key differences?

In this webex, Gero Matouschek (Partner PwC, Strategy&, Munich) & Steven Gough (Director PwC, London) discuss key developments with prominent market participants Ian Harrison (Direct Line Group Head of Commercial Transformation, London) & Lukas Jaworski (FRI:DAY Head of Marketing Communications and Content Strategy, Berlin).

Watch the WebEx here

For further information on any of the topics discussed please contact Steven Gough (details in contact section)


Executive summary

Small and Medium Sized Enterprises (SMEs) are the backbone of every economy. They account for 99% of all firms, 70% of employment and between 50% and 60% of value added in the OECD. They are also one of the most dynamic sectors of the economy, with 97,000 new SMEs formed each year in the UK alone.

On the face of it, SMEs should be an attractive market for insurers, commanding higher policy premiums than personal insurance. But the market is challenging, as SMEs come in all shapes and sizes and have different, and sometimes complex, needs. They often need the personalised advice of an agent or broker, but are unwilling to pay for the premium services tailored to bigger corporate clients. Could digital channels hold the answer? And are business customers ready to buy insurance online?

To find out, we spoke to 2,100 small businesses (with up to 50 employees) in 14 countries. Their responses uncovered a demand for digital insurance services that is not being met by the industry. This presents an opportunity (or a threat) for insurers. They will have to develop a clear strategy on how to deliver products and services across multiple channels. They will need to understand the evolving needs of current and prospective clients better. Finally, insurers will need to consider what is required in terms of people, processes and technology to deliver a personalised, multichannel experience.

Here is a summary of the main findings of our Global Digital Small Business Insurance Survey:

1. There is an unmet demand, globally, for digital small business insurance offerings

Digital is disrupting all sectors of the economy, and the insurance industry is no exception. Our global survey highlighted that small businesses expect insurers to offer online products, and to add more digital services going forward.

Less than a quarter of companies in our survey bought their business insurance online, often due to the limited options available to them. There are noteworthy geographical differences: those in the UK were most likely to have bought their business insurance online, while those in Switzerland were the least likely.

However, the future intention of these companies reveals a growing preference for digital services across all geographic markets. Among the small businesses that indicated they were likely to switch their insurance provider in the next 5 years, there was a strong preference for digital insurance products[1]; with 48% of respondents stating they would prefer to purchase their business insurance online.

Of those who indicated an online preference for the future, 50% would rather do this directly from an insurance company website; 28% would prefer a price comparison website or app, and just 10% would use a broker or agent’s site.

[1] Likely to switch provider in the next 5 years refers to the answer to the question ‘On average, how often do you switch insurance companies for any of your covers?’

Business implication: Insurers must start to think about what their digital offering will be, in order to serve this unmet need. Not only is there an unmet digital demand for purchasing insurance online, there is also an opportunity to reduce the cost of acquisition and service for this segment. 

2. Small businesses are confident about their business needs, but are often unknowingly underinsured

Today’s small businesses are switched-on, confident and clear about their needs. The survey highlights that in the vast majority of cases, responsibility for buying business insurance falls to the owner or founder of the company (83%).

As you would expect, these individuals feel they know and understand the needs of their business, and therefore the insurance they require. 51% of respondents said they are ‘quite confident’ and 23% are ‘very confident’ of their business’s insurance requirements.

However, when we asked for details of their current insurance policies, we found that many were unknowingly underinsured:

  • 18% of businesses do not have liability insurance in place;
  • Only 50% of businesses had indemnity insurance; and
  • Only 16% have cyber insurance in place, despite an additional 46% recognising that it could be applicable to their business.

The insurance ‘knowledge gap’ presents a clear opportunity to insurers. There is a need to articulate and visualise the impact of not purchasing certain types of cover e.g. liability insurance.  

Business implication: Insurers have an opportunity to help businesses understand the implications of being underinsured. 

3. Personal insurance purchasing behaviour is the biggest single predictor of current and future business insurance purchasing behaviour

A common assumption in the insurance industry is that size and sector are the main determinants of purchasing channel preference for business insurance. But our survey showed this was not the case for small businesses.

Rather, we found that the biggest influence on how business insurance is purchased rests on how small business owners buy their personal insurance. 59% of those who bought their personal insurance online also purchased their most recent business insurance online. The correlation becomes stronger for future decision making. 70% of owners who purchased their personal insurance online state they would like to purchase their business insurance online in the future. In fact, we found this correlation to be 10 times more influential than other factors, such as turnover, and 16 times more influential than sector affiliation[1].

There were differences from country to country; with UK business owners most likely to buy both their personal and business insurance online, and Swiss businesses the least likely.

[1] Looking at the partial impact, controlling for other individual and personal demographic factors in our survey

Investment Management

Business implication: Where personal insurance goes, business insurance is sure to follow. Insurers will need to re-evaluate their customer segmentation models for digital. Small businesses behave very much like individuals, and segmenting by sector and size alone may not be the best way to go to market; insurers need to understand more about the individual buyer too. 

4. New businesses are digital natives.

Whilst personal insurance purchasing habits were the largest determining factor for how an small businesses would purchase their business insurance, age of the business and business size also play a part.

When sorting out the factors that determine how small businesses purchase insurance, the survey showed that the age of a business was as important as its turnover, 83% more important than its number of employees, and twice as important as the age of the buyer[1].

A company which has been operating for less than a year is 20% more likely to purchase their future insurance online than an otherwise identical well established company[2].  As new owners establish their businesses they look online for recommendations and advice whereas established players have a deep relationship with their agent/broker.

With the establishment of 97,000[3] new SMEs each year in the UK alone, it demonstrates the needs for insurers to have both a clear approach for how they market themselves to new companies, and the digital insurance offering that is in place to be attractive to the businesses of the future.

[3] Looking at the partial impact, controlling for other individual and personal demographic factors in our survey (personal insurance purchasing channel, regularity of switching provider, turnover, age of business, country, industry, number of employees, age of respondent, position in business, confidence in understanding of business insurance needs)

[4] Looking at the partial impact, controlling for other individual and personal demographic factors in our survey

[5] UK Small business statistics,

Business implication: Our survey implies that digital channels will be key to attracting new small businesses. 

5. Small businesses want to do all their insurance work online

The insurance sector has begun to develop digital offerings for small businesses, with many investing in digital ‘shop windows’ that explain the products and services on offer before routing customers to face-to-face or telephone channels.

But in addition to doing their research online, small businesses now expect to be able to purchase, amend, renew, make a claim and track a claim online. With many business sectors now offering seamless and comprehensive online services, insurance organisations are faced with little option but to do the same.

Small businesses want a consistent and connected digital offering across the customer journey, from being able to buy a policy online (36%), to making claims (36%), tracking claims (55%) or amending a policy (38%).

Business implication: Insurers will need to create a fully digitalised insurance service, which in turn will require end-to-end digital processes and a genuine digital operating model.

6. But customers still expect insurance advisors to be on hand

Despite small businesses demanding a digital offering to purchase and manage their insurance policies, they also seek advice. They want the convenience of a digital offering, with the flexibility to be put in contact with expert advice at a time that is right for them. When small businesses were asked to cite the primary reasons for what would drive them towards purchasing online, the following aspects of the purchasing experience were key:

Customers still want expert service
Our survey indicated that businesses want a blend of the digital and human world – the convenience of a digital offering combined with access to expert advice when needed. This is what they value:

A personalised service
Insurers will need to address the widespread perception among small businesses that purchasing online insurance somehow leads to a more challenging claims process if they don’t have a personal agent.

The right to have expert advice on hand
Small businesses continue to seek support. ‘Expert advice’ came second only to price among the factors that might persuade a small business to acquire their insurance online. Those who were not interested in online offerings cited the need for advice just behind an existing relationship with a broker.

The option of tailored products
Small businesses also need reassurance that they will be able to obtain tailored products online. The perception today is that digital services offer generic policies rather than personalised products.

Competitive pricing
Finally, price will continue to be the decisive factor behind the choice of insurer. 17% of respondents said they would buy insurance online if it saved money.


Business implication: Insurers should review their overall channel strategy to look at how they can provide a digital offering across each stage of the customer journey, while retaining other channels such as helplines and face-to-face appointments. Rapid advances in Artificial Intelligence and machine learning mean that in the future, human advisors could be substituted by intelligent communication technology.

7. Small businesses are seeking connected digital services, not just insurance

For those insurers who are willing to look beyond their existing market, the opportunity is significant. The survey demonstrated that in the first instance small businesses are willing to purchase a broader set of services from insurers. 45% of small businesses expressed an interested in purchasing legal cover (62% in Germany) and 26% would purchase risk advice (50% in Brazil).

Small businesses are also looking for insurers to work as part of a broader ecosystem of service providers, with more than 50% of respondents open to a ‘one stop shop’ digital platform for accessing a wide range of services, including market trends, tax, legal and regulatory advice, online banking and accounting.

Business implication: In the short term there is an opportunity for insurers to look at how they extend their core product and service offering to include additional products such as legal cover and risk advice. In the medium term, insurers will need to look at how they partner with the broader ecosystem of online services – such as banking and accounting – to connect their offerings and present this in a simple and compelling way to small businesses. 

Conclusion: Preparing for a new age of digitally-enabled small businesses

Regardless of size, age, sector or location, the way small businesses acquire insurance services is expected to change in the near future. The question for insurers is how they intend to adapt to keep up with the evolving preferences and expectations of their clients.

Here are eight ways we believe insurers can successfully respond to the new age of direct digital services for small business:

  • Know your customers and choose your focus wisely – use customer research, segmentation and techniques such as customer personas to understand your customers’ needs, cost to serve and profitability per customer and customer group. Carefully select the right segment for digital pilots and further roll-out – taking into account the segment size, the complexity of their needs, preferences, etc.
  • Define the right strategy – Review your customers, channels and distribution strategy. Do you have the right skills and capabilities for the right channels? For example, is everything in place to help customers track their claims online?
  • Explore the option of building a new digital small business greenfield to meet the expectations of this sizeable segment waiting to take full advantage of digital services. 
  • Adopt a test and learn approach – involve customer testing groups when designing new solutions. Rapidly build prototypes and test them with a target customer base.
  • Evolve your existing business – enable your business to adapt to the changing client landscape. As customers demand more digital services, how can insurers adapt to meet these needs? Be clear about the capabilities you will need in a digital age, from new underwriting approaches and skills to digitally enabled account managers. Invest and adapt to acquire these over time.
  • Invest in identifying how to take advantage of the digital opportunity, including the underlying operating model across the whole value chain. Invest in enabling technology based on the redefined operating model that will enable development. Look to the burgeoning Insurtech startup community for new ideas and new ways to engage customers.
  • Embrace online marketing, advertising and knowledge. This is the new battleground for acquiring customers.
  • Protect your business against the risk of cyber attack as well as providing new risk prevention and cyber products to meet your customer needs.

We hope that you found our report challenging and useful. If you have any queries or would like to discuss any of the issues in more detail, please speak to Dr. Gero Matouschek; your usual PwC or Strategy& contact or one of the contacts listed below.

Contact us

Jim Bichard
UK Insurance Leader, PwC United Kingdom
Tel: +44 (0)20 7804 3792

Steven Gough
Director, Transformation, PwC United Kingdom
Tel: 020 7213 4098

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