Ian Gosden warns insurers trying to shortcut SME by going direct face great risks
Ian Gosden, managing director of Higos, warns that insurers wanting to grow in the direct SME market face being wrong-footed by their customers.
Gosden said: "SMEs are clearly a key target for insurers in 2011, with considerable competition to take costs out of the products particularly when offered through direct and online offerings.
“However, taking out SME insurance is not like insuring a car; commercial enterprises can be complex and the size, scope, needs and growth prospects of the business must be taken into consideration when sourcing insurance cover.
“The danger for people in obtaining quotations online is that, while it may seem to simplify the process, businesses receive no advice on the most appropriate cover for their business, and for all they know they could be greatly under insuring or not selecting the covers they really need, the proof of which will only come to light when they need to make a claim.
“For businesses like tradesman, for example, they need to know what employers’ liability cover they need for bona-fide sub contractors and when they need insurance and when they do not. Correct definitions for these areas of cover are simply not available on many direct sites. So how does the employer know what cover to take out? The simple answer is that they don’t and that could spell trouble for them further down the line."
Gosden also warned that customers are getting a raw deal from the banks when it comes to obtaining insurance quotes.
He said: “Similarly, we are finding that quotations being received from some banks can be significantly in excess of the standard rates. This is particularly so in the case of new businesses. We have seen quotations which have been 50% higher than the quote we have been able to obtain.
“This looks like banks making the assumption that as clients who have set up loans and business finance will take the easy option of accepting the quote they provide rather than the inconvenience of shopping around for cover.
“A broker will have that face-to-face meeting with the business and ensure they get the best range and level of cover to ensure their business has the right insurance protection in the circumstances should they need to call upon it.”
