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Blog: Are insurers effectively engaging with SMEs?

SME shake

The SME market represents a major area of growth for insurers but Sara Costantini, managing director of Crif Decision Solutions, asks what providers are doing to capitalise on this opportunity?

Sara Costantini
Sara Costantini, managing director, Crif Decision Solutions

In November 2018 Global Data predicted that the small and medium-sized enterprise insurance market would be worth £8.3bn in 2020 and if insurers want to retain and expand their market share in this sector, now, more than ever, they need to be effectively engaging with SMEs.

Crif conducted a survey into SME insurance with Post in July. More than 64% of insurer respondents agreed that the SME market represented a major opportunity for their business. So, what is being done to capitalise on this opportunity?

The need for an easier purchase process is widely recognised. The current customer onboarding journey is in many cases long, tedious, complex and inflexible. 

SMEs are typically expected to answer an extensive and time consuming list of questions. Data enrichment and smarter use of data, which also provides the opportunity for the insurance provider to know their customer better, is key to simplifying the purchase process. 

Over 67% of respondents felt that data pre-population would significantly improve the customer journey for an SME. Partial population of risk information to provide a faster and better customer experience can support more sophisticated risk analysis, which will, in turn, lead to better pricing. 

Automating as much as possible of the insurance purchase process delivers speed and ease and arguably greater accuracy; the successful roll out of this approach can be seen in personal lines, with examples of partial and full automation.  

A business owner or manager purchasing insurance for an SME is most likely familiar with the process for purchasing personal lines cover and this naturally creates an expectation of a similar customer experience.      

However, within the market there remains some resistance, largely driven by concerns related to the SME being well enough informed to understand their insurance needs. If question sets are reduced and the SME isn’t prompted to reveal details by a question, how can the insurance provider be sure that they have a full picture of the risk? 

This comes back to effective use of data and the question of education. SMEs need to understand the risks and threats that face their business and they need to understand the insurance proposition and the cover they are buying. Only then can apposite cover be assured. The insurance provider that adds value by communicating clearly and providing this knowledge, while at the same time presenting their cover options in simple language, ditching ‘insurance speak’ for ‘business speak’, can be expected to enjoy competitive advantage. This is why there continues to be a move to insurance providers focusing on specific business sectors and particular SME models; in order to further build and draw on relevant domain expertise.

Another significant piece of the puzzle that is effective insurer engagement with the SME market is product flexibility. At one end of the scale is a digital service which allows the SME to amend and manage their cover 24 hours a day/365 days a year, at the other, a one size fits all approach with little ability to shape or update the product save at mid-term or renewal. 

In the middle lies the modular approach with commercial combined products enabling the SME to select and adapt the cover they need. With new market entrants bringing ‘pay as you go’ insurance to the SME table, the need to offer a proposition that can mirror the requirements of a modern business operating in a competitive environment is paramount. 

Of course, digital entrants benefit from a lack of legacy infrastructure making innovation less challenging; but established insurance providers that rise to the challenge have the additional leverage of longevity and brand.

It is clear that effective engagement with the fast moving SME market is on insurers’ agendas. Differing priorities can be seen in the various strategies at play. What is certain is that this is a fluid operating environment and the ability to listen and react to emerging SME needs is a pre-requisite to remaining relevant.    

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