SME insurance market set for digital transformation
Small firms are increasingly looking to interact with insurers online, suggesting the market is set to experience a similar digital transformation to the one seen for personal insurance.
A growing number of small businesses say they are looking to interact with their insurers online. A new PwC survey of 2,100 small businesses from across the globe shows the insurance market for small and medium sized enterprises (SMEs) is likely to completely transform to match the digital transformation seen personal insurance over the past decade. PwC says the insurance industry needs to act now to meet this growing demand from small businesses.
It also shows that demand is likely to be higher in the UK than in the rest of the world, with 46% of small businesses saying they have already purchased insurance online, compared with 24% worldwide. In addition, over a third of small British firms say they would be willing to use sensor technologies in their businesses if it they thought it would bring down premiums.
The research involved surveying 2,100 small and medium-sized businesses (SMEs) with up to 50 employees, finding that 60% under five years old in the UK want to purchase business insurance online. This falls to 44% among more established companies aged over ten years, suggesting there is only a small window of opportunity for insurers to engage and build relationships with small businesses. It was also found that global cyber insurance for SMEs is extremely low, with just 12% of UK firms and 16% globally currently covered, despite an additional 46% saying it could apply to their business.
Summary of the main findings of the Global Digital Small Business Insurance Survey:
- There is widespread unmet demand for purchasing business insurance online.
- Small businesses are confident about their business needs, but are often unknowingly underinsured.
- Personal insurance purchasing behaviour is the single biggest predictor of current and future business insurance purchasing behaviour.
- New businesses are digital natives.
- Small businesses want to do all their insurance work online.
- But customers still expect insurance advisors to be on hand.
- Small businesses are seeking connected digital services, not just insurance.
“Insurers must have the capabilities to understand their customers and have technical solutions allowing them to rapidly evolve and adapt solutions as the market changes. Insurers must also look to startups not just as customers but as potential partners in providing new technology solutions and value-added services. By doing so, insurers will be well placed to interact with new small business customers on an ongoing basis - not just at renewal” said Steven Gough, insurance director at PwC.
“Taking a lead from the digital transformation seen in personal lines, UK insurers are now leading the way on how they interact online with small businesses,” PwC UK insurance leader, Jim Bichard, said. “Despite some progress, our research shows there is still so much more to play for in closing this insurance gap,” Bichard continued. “Using technology, insurers can also reinforce the value they bring through providing greater coverage for current and emerging risks.”