SME Insurance: How to Unlock the Opportunities
The SME market is only now beginning to gain its rightful share of attention from the insurance industry. Addressing the SME market becomes not only viable, but profitable. How?
This April, German insurtech InsureQ partnered with leading incumbents to offer a wide range of insurance packages tailored to SMEs’ needs, a segment which has historically been underserved in Germany. These digital insurance solutions enable “SMEs and freelancers to find, buy, and claim insurance online in less than 10 minutes (…)“, the insurtech says.
Earlier in February, Alliance Insurance launched a portal to bring 5 crore SMEs under the insurance category. “Dubbed as SMEInsure, the new platform will benefit Micro, Small and Medium Enterprises (MSMEs), small shop and business owners amid financial emergency”.
The SME market is only now beginning to gain its rightful share of attention from the insurance industry. Personal-lines and commercial-lines insurers have focused on well-known markets, but have traditionally left SMEs somewhere in the middle and underserved by both. Complex policies and buying processes, expensive premiums and (whether justified or not) a poor reputation for paying claims have not helped to win the trust and business of this large, untapped market.
With radical changes in efficiency and scalability from digitalisation, and new segmentation and analytics capabilities provided by new technology, addressing the SME market becomes not only viable, but profitable.
Digital platforms can be used to address diverse markets with better segmented products and policies more likely to appeal to SMEs. Letting the customer more easily provide data during a digital quotation journey means algorithms can instantly match and offer product options, with all the underwriting work having been upfront in the product design. Taking advantage of the same new technology platforms, insurers addressing new SME segments can use the digital customer data to gain real-time oversight of risk exposures and other performance KPIs.
Another moment of truth in SME insurance is where the business needs to make a claim. The claims experience should be just as convenient as taking out insurance in the first place. Well-designed digital platforms for SME insurance will deliver this and reap the benefits of improved loyalty and retention.
Marketplaces are becoming increasingly prevalent, be they commercial insurance e-trading platforms like the UK’s imarket, price aggregators or agent/MGA portals. Managing multiple presences can be made easier through digital data and product management systems which incorporate APIs, providing a single point of control for products and pricing, as well as the ability to tune offers to individual channels.
Leveraging modern technology to tackle the SME opportunity does not require a “big bang” replacement of legacy infrastructure to be able to develop the required capabilities. The steps to get there can be relatively small, innovating incrementally. Demonstrating value early, teams can build momentum towards further digital transformation goals. FintechOS technology helps established insurers and financial institutions achieve this acceleration: via a powerful but easily adopted low-code/no-code platform, businesses are able to move ahead of the pack to unlock major competitive opportunities such as SME insurance.
Author: Karl Lawless , VP Insurance at FintechOS