Expert view: E-trading SME business

The small and medium-sized enterprise (SME) sector is booming in the UK, with Federation of Small Business (FSB) data showing an additional two million SMEs since the turn of the millennium*.

For the insurance sector, this is translating to a 12% average annual growth in SME gross written premium, and SME customers becoming an increasingly important segment to cater for.

However, a number of challenges still remain when trading SME business. We look at some of these challenges and how insurers are responding to support their brokers.

Finding solutions for diverse needs

The first challenge for brokers is that SMEs’ needs – like their size and activities – are incredibly diverse.

Brokers must get to grips with an organisation’s unique circumstances and source solutions that meet the SME’s particular needs.

“Each intermediary will approach this challenge differently: some focus on certain sectors and establish specialisms, while others target everything in between,” explains Paul Tombs, Head of SME at Zurich. “Whatever the approach, insurers need to ensure that their SME proposition addresses this challenge.

“At Zurich, we offer both broad policies to accommodate a wide variety of activities – such as our Trades and Professions product – as well as a range of tailored solutions – such as our Property Owners and Shop and Salon products.

“A flexible underwriting approach is also important. Our underwriters will help brokers identify suitable products for their customers and work hard to create propositions and products that enable them to win business.”

Price focus and stiff competition

The SME market is notoriously competitive. Price is usually a bigger driver for SME customers, and brokers are always seeking to add value to their proposition.

“SMEs’ budgets are usually tighter, so we can’t get away from price being an important factor. We are constantly reviewing our pricing to ensure we give the end customer value for money. This allows us to offer competitive premiums, while still delivering the right level of protection,” says Tombs.

“When trading with Zurich online, either via our ZTrade platform or through Acturis, brokers also have a straightforward commission slider, allowing them to control the commission they receive which could help them to win more business or increase their revenue.”

Overcoming scepticism and misinformation

Zurich’s Risk Index survey shows that, on average, SMEs believe that insurers only pay out on 61% of claims. This entrenched scepticism can be challenging for both brokers and insurers to overcome.

“As a sector, we must work harder to counter such perceptions, demonstrating our value and integrity where it matters – especially when claims occur,” says Tombs.

“Zurich, for example, paid out on 99% of commercial claims in 2016, totalling more than £2bn. Furthermore, our pioneering approach to the Insurance Act – opting to pay claims in full and charge the additional premium that would have been due had we known the relevant material facts, rather than reduce customers’ claims settlements – assures brokers and customers that they’ll be protected when they need it.

“Fundamentally, however, it is about giving customers the right cover from the outset. Firstly, we offer broad policy wordings, meaning more losses will be covered. We have also invested significantly in ways to help avoid underinsurance – such as our innovative Business Interruption (BI) Calculator, which helps brokers set accurate BI cover levels.”

Maximising profitability on smaller premiums

Due to the lower levels of premium income, ease of transaction is essential for brokers in maximising their profitability.

“Insurers are all investing heavily in ways to help brokers minimise their cost base when dealing with them,” says Tombs. “Central to this for Zurich has been the development of our ZTrade platform. Crucially, we collect monthly feedback from users and constantly improve our service in response to their feedback.

“However, fundamental to our success has been letting brokers choose how they deal with us. One of the key pieces of feedback from our brokers has been around the support we provide with our electronic trading. Brokers can just pick up the phone if they want to talk through a particular case customer quote or query.

“To further broaden brokers’ choice, we’ve now launched our Property Owners, Shop & Salon, and Trades & Professions products on Acturis”.

For more information on how Zurich can help you better serve your SME customers, please login to ZTrade, discover us on Acturis or contact your local Zurich Account Executive.

*https://www.fsb.org.uk/media-centre/small-business-statistics