SMEs going digital for their insurance needs
Written by staff reporter
A growing number of small businesses say they are looking to interact with their insurers online according to a survey of small firms around the world, with UK companies among the most ‘digitally savvy’.
The PwC survey of 2,100 small businesses suggests that the insurance market for 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.
The survey, which included 300 firms from the UK, also showed that small businesses in the UK are more digitally savvy than their peers across the world when it comes to interacting with their insurance providers online, with almost half (46%) saying they have purchased insurance online (vs 24% worldwide).
Of those looking to switch insurance providers in the next five years, over two thirds (68%) of UK firms employing less than 50 people say they would look to buy their next insurance policy online. Over a third also say they would be willing to use sensor technologies in their businesses if it would bring down their insurance premiums.
Jim Bichard, UK insurance leader at PwC, said: “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. Despite some progress, our research shows this is just the tip of the iceberg and there is still so much more to play for in closing this insurance gap. Using technology; insurers can also reinforce the value they bring through providing greater coverage for current & emerging risks.
He added: “In order to make the most of this growth opportunity, insurers need to focus on understanding the varied and complicated ways the UK’s small businesses function, as well as investing in ways to deliver a full range of products that will meet their needs.”
The research also suggests that recently-founded companies are more likely to interact with the insurance industry online. In the UK, 60% of small companies under five years old say they want to purchase business insurance online - this drops to 44% of more established companies aged over ten years, who tend to have deeper relationships with brokers and agents.
The findings also reveal that many small businesses are often unknowingly underinsured, leaving them vulnerable to paying out large sums in claims and legal costs if an incident occurs. Across the globe, cyber cover for small business is extremely low, with just 12% of small UK firms and 16% of global firms telling PwC they currently have cyber insurance, despite an additional 46% acknowledging it could be applicable for their business.
In addition, just under a fifth (18%) of global small businesses do not have liability insurance, and only half have indemnity insurance.