Customer Behaviour

SMEs are the backbone of the UK economy, accounting for over 99% of all companies, around half of private sector turnover, and more than 60% of the gross premiums written for commercial property and casualty lines. Over the last 18 months, they’ve been hit by the double whammy of the pandemic, which forced many to temporarily shut their doors, and the ongoing hard market, characterised by reduced competition, rising premiums and narrower policy coverage. However, according to the latest research, a sizeable majority of UK SMEs (60%) are optimistic about the future.

Business owners’ attitudes, behaviours and purchasing habits have been shaped as consumers during this extraordinary period, and this is having an impact on the way they view, assess and buy insurance. Where personal lines go, SMEs will surely follow. So how are their expectations of insurance changing, and how can brokers best serve the ever-evolving needs of this customer segment with significant growth potential?

Here are our top five tips.

Tip #1: Speed and convenience are a priority for business owners

UK SMEs are the most digitally savvy in Europe. A growing proportion expect to make all their purchases online – particularly sole traders and zero-employee businesses who typically handle administrative tasks outside working hours and therefore prize speed and convenience in their transactions.

E-trading helps control costs and allows brokers to place cover quickly and efficiently for risks that fall within standard parameters – and a growing proportion of risk profiles are now eligible to be traded online. Multi-step purchasing journeys can be extremely challenging for time-pressed business owners. If brokers ask the right questions and gather all relevant information from the customer upfront, this enables straight-through trading and avoids the need for referrals, which can elongate the underwriting timeframe.

In the event of a loss, a frictionless claims management process and speedy settlement is crucial to getting the business back on its feet and can create a lasting impression of value for money in the customer’s mind. Response times are key, so in the event of a surge in enquiries and claims such as that seen during the pandemic, it is essential to manage expectations and keep the customer fully informed throughout the process.

Tip #2: Don't underestimate the value of the human touch 

According to a recent study of post-COVID attitudes towards insurance by McKinsey, SMEs are increasingly price-sensitive, yet prioritise good value when buying insurance over lowest price. With premiums on the rise due to the hard market, this emphasis on value makes customer experience an all-important differentiator.

During the lockdown, people grew accustomed to interacting with chatbots or being directed to FAQ pages on websites to get queries resolved. Today, over half of SMEs say that the ability to talk to a human when buying insurance has become more important, giving brokers an opportunity to rebuild customer experience by balancing the convenience of online transactions with value-added personal service.

Did you know...

60%

of SMEs are optimistic about the future 

99%

of UK businesses are SMEs

60%

of gross-written premiums in the private sector are from SME contributions

61%

of UK workers are employed by SMEs

Tip #3: Rebuild confidence amongst risk-averse customers

Many SMEs are still rebuilding after 18 months of restricted income. Perhaps fuelled by the debate around business interruption, they need reassurance that they are adequately covered in a time of need. Trust has become more important than ever and customers are demanding greater transparency around terms and conditions.

Many SMEs look to their brokers to remove complexity from the insurance transaction, help them define their risks and requirements, and identify appropriate cover. This underscores the need for clarity in policy wordings, and presents an opportunity for brokers to draw on their market knowledge as a selling point, and explain the protection offered in layman’s terms, to instil confidence in customers and help them make informed choices.

Tip #4: Become a trusted business advisor 

For struggling SMEs, insurance premiums may seem like yet another overhead if they have insufficient understanding of their risks or how being underinsured could prove catastrophic to their business. Insurance can be crucial to SMEs’ sustainability by providing financial support for common business exposure risks, since these customers are the least likely to be able to afford substantial losses caused by, for example, business closures, loss of income, property damage or employment tribunals.

Small firms can really benefit from a broker who can act as a business advisor rather than simply sell them insurance, and help educate them on what risks could affect them in future. Brokers who take the time to truly get under the skin of their customer’s business are well-placed to offer advice on products they may not realise they need, such Directors & Officers Liability, cyber protection, fleet risk management or legal expenses.

Tip #5: Promote risk management as a key differentiator 

SMEs are understandably risk-averse, yet typically have little in the way of in-house risk management resources and infrastructure to protect their business from many preventable scenarios. The ability to pick up the phone to a broker when there is so much uncertainty about risk is something that many customers will appreciate.

RSA provides a wide range of trade-and sector-specific risk management guidance via our website, from property and liability to security and business interruption risks, which brokers can share with their customers to mutual advantage. Brokers can engage prospects by bringing risk management into the conversation, rather than simply competing on price and cover, and help SMEs develop a clear picture of the risks they face – now, and in future – and what steps to take to mitigate them.

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Brokers and Partners

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