Grant Thompson of MS Amlin looks at the SME market
The SME marketplace is an increasingly competitive one with new entrants and new challenges. From the potentially disruptive Fintech model, to SME’s increasing willingness to go direct, and the emergence of a digitally native generation of SME business owners. There is great pressure on the traditional market model.
We asked brokers at a recent Insurance Times event what their biggest challenge was in the SME market and the overwhelming response was how they differentiate.
We also asked what the biggest opportunity was in SME for them and again there was a clear winner - which was using digital methods to improve efficiency and profitability.
So how do brokers take advantage of the opportunity digitalisation presents to stand out from the crowd and offer something different to clients in order to win and retain SME clients?
The challenge is how we leverage new technology for efficiency gains but at the same time create solutions that differentiate a brokers offering. There are a number of ways we can exploit new technology to build on traditional broker strengths of getting close to clients to really understand their needs then finding the most suitable solution. In an Insurance Times e-trade survey, 60% of brokers said that e-trading actually allowed them to focus on building stronger relationships with their clients. Quicker access to the market means time is freed up to foster new and existing relationships. But how do brokers stand out in this environment?
One way is to create industry or segment based propositions for particular niches. There are 5.5million businesses in the UK, accounting for 60% of private sector employment and 47% of turnover*. There are many segments and sub segments out there, and by using internal and external data sources with modern analytics tools it’s becoming easier to identify differing client groups with specific needs and characteristics.
Digitalisation can also enable more effective product development, using flexible and simple platforms, we can create, deliver, and service specific propositions for multiple industries or client types more quickly and cheaply.
Although the SME market is increasingly competitive and changing, its size and diversity still represents a huge opportunity. In fact, over 80% of brokers we asked saw technology as more of an opportunity than a risk. There are exciting times ahead and insurers and brokers must work even more closely together to make use of technology, not to just lower cost and create efficiencies but also to build on traditional strengths of understanding clients and creating solutions to meet their needs.
* Source: BIS 2016