UK SME Insurance: Distribution Dynamics 2017

  • ID: 4429060
  • Report
  • Region: United Kingdom, Great Britain
  • 47 pages
  • GlobalData
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UK SME Insurance: Distribution Dynamics 2017

Summary

With insurers increasingly seeking to grow their share of the SME market competition, further advances in technology have allowed for products to become more specialized, allowing for niche markets to be targeted more accurately. Brokers have remained the most used channel when purchasing insurance, yet their share of the SME market has decreased significantly in 2017 according to the results of our 2017 UK SME Insurance Survey.

SMEs have begun to purchase their insurance products via a number of different channels, and it is clear - particularly in the micro enterprise space - that an omni-channel approach is best for insurers to capture business. Purchasing both directly from the insurer and via price comparison websites have increased. Insurance companies also continue to provide an increasing variety of products that cater more specifically for the smallest of SMEs. Given that businesses of this size represent the majority of SMEs by number, the growth of non-brokered purchasing channels is unsurprising.

Key findings include in this report:
  • Purchasing insurance online via a PC remains the most common method across SMEs, with 33.1% using this method in 2017.
  • Renewal rates in commercial insurance are significantly higher in comparison to personal lines, with the overwhelming majority of SMEs remaining with their current provider in 2017.
  • Younger businesses are embracing technology when purchasing their insurance, with the use of tablets and smartphones highest among business that have operated for less than two years.
Ensuring policies are easily understood is essential to improving customer satisfaction. In order to increase their share of the market providers should aim to provide a clear and concise explanation as to what is included within cover, as SMEs cited this as one of the key services insurers should provide.

The report "UK SME Insurance: Distribution Dynamics 2017", looks at how SMEs buy insurance coverage and the reasons behind their purchasing decisions. This report also examines the services SMEs are currently receiving and the additional amenities they would like from their provider going forward. Other influential factors are also taken into consideration, such as the age of the business owner and the age of the business.

Scope
  • Purchasing insurance online via a PC remains the most common method across SMEs, with 33.1% using this method in 2017.
  • Commercial insurance renewal rates are significantly higher in comparison to personal lines, with the overwhelming majority of SMEs remaining with their current provider in 2017.
  • Younger businesses are embracing technology when purchasing their insurance, with the use of tablets and smartphones highest among business that have operated for less than two years.
Reasons to buy
  • Identify the most prominent sales channel for SMEs.
  • Adapt/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.
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1. EXECUTIVE SUMMARY
1.1. Market summary
1.2. Key findings
1.3. Critical success factors

2. THE SME PURCHASING JOURNEY
2.1. Introduction
2.1.1. The value of SMEs to the UK economy
2.2. The dominance of brokers is under threat
2.3. Medium-sized businesses favor brokers
2.3.1. Micro-sized businesses continue to shift towards purchasing direct
2.3.2. Small businesses are increasingly purchasing directly from insurers in 2017
2.3.3. Banks have lost market share among medium-sized businesses
2.4. SMEs rely heavily on technology when purchasing products
2.4.1. SMEs purchasing insurance policies favor PCs
2.4.2. Young companies are embracing the use of technology
2.4.3. Face-to-face purchasing increases in popularity in line with the age of the business
2.4.4. Older owners avoid modern technology as a purchasing method
2.5. Few SMEs struggle to understand their insurance policies
2.6. SME pre-purchase activity
2.6.1. Contacting existing provider
2.6.2. The potential for customer retention is high

3. SME RETENTION
3.1. The majority of SMEs remain with the same provider
3.2. Sole traders are sensitive to price changes when renewing
3.3. Micro enterprises (excluding sole traders) have a high retention rate
3.4. Small enterprises are keen to save on price when renewing
3.5. Medium enterprises have a high degree of loyalty to providers
3.6. Premium prices are the biggest influence when deciding to switch
3.6.1. Premium prices are key to customer retention
3.7. Services provided by insurers
3.7.1. A simple policy explanation is a key service required by SMEs
3.8. The most common added-value service used by SMEs is legal advice
3.8.1. Openness to receiving services is dependent on SME size

4. APPENDIX
4.1. Definitions
4.1.1. SME
4.2. Methodology
4.2.1. 2017 UK SME Insurance Survey
4.3. Further reading

List of Tables
Table 1: Methods used when purchasing travel insurance, 2017
Table 2: Activities undertaken prior to purchasing insurance, 2017
Table 3: Actions undertaken by SMEs at the time of renewal, 2017
Table 4: Reasons for switching insurance provider, 2017
Table 5: The most important additional services insurers can provide, 2017
Table 6: Percentage of SMEs receiving additional services, 2017

List of Figures
Figure 1: The use of brokers in 2017 is significantly lower than previous years
Figure 2: SMEs of all sizes favor the broker channel
Figure 3: Direct purchasing among micro enterprises has risen at the expense of brokers
Figure 4: The broker channel is most commonly used across policies for sole traders
Figure 5: The use of banks features more prominently for micro businesses excluding sole traders
Figure 6: Brokers and banks have lost out in the small enterprise space
Figure 7: Small enterprises’ private medical and cyber insurance purchasing is dominated by brokers
Figure 8: Brokers dominate insurance purchasing among medium-sized enterprises
Figure 9: Brokers dominate across all policies for medium enterprises
Figure 10: Using a PC is the most common method for purchasing insurance
Figure 11: New businesses embrace technology when purchasing
Figure 12: The proportion purchasing face to face increases in line with business age
Figure 13: Younger business owners are more likely to use technology in the purchasing process
Figure 14: The majority of SMEs understand their insurance policies
Figure 15: Contacting existing providers remains the most common action
Figure 16: Sole traders are most likely to switch to a new provider
Figure 17: Price plays an instrumental role when sole traders renew insurance
Figure 18: Retention of micro enterprises (excluding sole traders) averages 81%
Figure 19: Small enterprises are highly conscious of insurance prices
Figure 20: The overwhelming majority of medium sized enterprises remain with their current insurer
Figure 21: The new provider’s premium prices are the most common reason for switching
Figure 22: A simple explanation of the policy is the most important service for the smallest SMEs
Figure 23: Small and medium enterprises also rank simple policy explanation as the most important service
Figure 24: Legal advice is the most popular added-value service among all SMEs
Figure 25: Sole traders do not value additional services
Figure 26: Small and medium enterprises are most open to receiving new services
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