Brokers are the most popular channel among SMEs when purchasing insurance. However, there are higher levels of competition in this space than among larger corporations. This is due to different-sized SMEs having a varying degree of complexity in their insurance needs, allowing them more versatility when choosing how to purchase insurance. Banks and price comparison websites (PCWs) continue to challenge brokers' dominance, although PCWs' role is limited to simple and familiar products. Capturing market share within this space is no easy task, as the proportion of policies that are auto-renewed is quite high. In the end, price is the defining reason SMEs switch policy. As a result, insurers that can lower premiums through more accurate underwriting or cutting administrative costs will find success in increasing their market share.
This report looks at how SMEs buy insurance coverage and the reasons behind their purchasing decisions. It examines the channels used by SMEs when purchasing insurance, pre-purchase activities, switching behavior, and the factors most important to SMEs when selecting or switching provider.
- The broker channel accounts for 46.3% of all SME insurance purchases.
- Loyalty is high, with 82.5% of SMEs ultimately renewing their insurance policy.
- Price is the number one factor SMEs consider when picking a provider. The ability to tailor a policy to specific needs is also favored across SMEs when selecting a provider.
- A provider's poor service is not one of the top three reasons for switching provider. Price plays a much more significant role, especially among smaller businesses.
Reasons to buy
- Identify the most prominent sales channel for SMEs.
- Adapt or re-evaluate your distribution strategy and proposition to meet the needs of modern consumers.
- Discover the factors influencing SME purchasing decisions and distribution channel selection.
Key Topics Covered:
1. EXECUTIVE SUMMARY
1.1. The broker-dominated SME insurance market remains retention-heavy
1.2. Key findings
1.3. Critical success factors
2. THE SME PURCHASING JOURNEY
2.1.1. SMEs make up the backbone of the UK economy
2.2. Brokers are under threat from the banking channel across all SMEs
2.3. Personal lines preferences are not reflected in commercial insurance
2.3.1. Familiarity using a broker is the top reason SMEs use that channel
2.3.2. SMEs use PCWs to get better prices
2.4. What channels do different SMEs prefer?
2.4.1. Brokers are the most popular purchasing channel across all SMEs
2.4.2. Sole traders are purchasing through PCWs more often than two years ago
2.4.3. Micro businesses are moving towards purchasing through banks and PCWs
2.4.4. Small businesses have shifted from the direct channel to PCWs and banks
2.4.5. The broker channel leads the way among medium-sized businesses
2.4.6. SMEs predominantly auto-renew policies across all business sizes
2.4.7. More than a third of newly formed SMEs purchase their insurance online
2.4.8. Face-to-face purchasing increases in popularity in line with the age of the business
2.5. SME pre-purchase activity shows a retention-heavy market
2.5.1. SMEs' primary action at renewal is to call their existing provider
2.5.2. A significant percentage of SMEs conduct research on PCWs
3. SME RETENTION
3.1. Larger businesses are more likely to renew their existing policies
3.2. Sole traders compare prices at renewal, but rarely change
3.3. Micro enterprises (excluding sole traders) have a high retention rate
3.4. Small companies are less likely to shop around than micro businesses
3.5. Medium enterprises show the highest degree of loyalty among SMEs
3.6. SMEs are most likely to switch provider due to price
4. SME PROVIDER SELECTION
4.1. Policy cost is the main factor for SMEs when choosing a provider
4.1.1. The ability to tailor policies around specific needs is important to all SMEs
4.2. The most common added-value service used by SMEs is legal advice
4.2.1. Openness to receiving services is dependent on SME size
- Lloyds Bank
For more information about this report visit https://www.researchandmarkets.com/r/dawzzs