Alex Ktenidis: Tackling SME underinsurance with the ‘right conversation at the right time’

Underinsurance is a frustratingly stubborn problem in the insurance sector, with recent research from insurer Allianz UK showing that, despite widespread awareness of the problem, many firms do not adapt their coverage to fit new circumstances.

In a survey of 500 SMEs conducted by the insurer, 80% of respondents indicated that they were familiar with the concept of underinsurance and its potential impact on business operations. 

However, while nearly half of these respondents (248) had either reduced their coverage or kept it the same, 78% were confident in their business’ ability to grow in the next year, with 46% planning to launch new products or services. 

Underinsurance remains rife – stats from Gallagher, for example, revealed that 46% of commercial properties were underinsured in the UK, with an average shortfall in cover of 40%.

And, according to a YouGov study conducted between 9 and 19 January this year, 80% of SMEs do not always update their insurer on business changes and many lack the time to assess their insurance needs properly

In conversation with Insurance Times on the Allianz UK research, the insurer’s UK’s director of digital trading Alex Ktenidis says: ”SMEs are sleepwalking into an underinsurance problem at the moment.

“The research we’ve done has really highlighted that there’s a perception versus reality gap here and we, collectively as an industry, need to take it on.” 

Much of the battle in combating underinsurance comes not from raising awareness of the problem itself, but in supporting brokers and illustrating the impacts that not being sufficiently insured can have on an SME. 

Ktenidis adds: ”This means us, as Allianz, leveraging our data and providing it to our trusted partners at the point of quote, so that brokers are able to prompt their clients to review their positions.” 

Right info, right time

To support these conversations with brokers, Allianz UK will launch its new Smart Broker Brief tool next week (18 August 2025). 

The new tool collects and leverages Allianz data and insights to provide brokers with the information they need to more easily and efficiently support clients, without having to collect many different sources of information themselves.

Included as part of the tool is a risk identification guide, which highlights potential underinsurance and other risks.

Ktenidis explains: ”To combat underinsurance it’s vital that, through all the different stakeholders, we’re having the right conversation at the right time to try and increase coverage levels.

”The Smart Broker Brief, which we recently developed, is a document that is sent out to our digital clients when we flag underinsurance, so we can present it and and suggest what we think a more appropriate sum insured could be. 

“We’ll even flag if indemnity periods might look low for a similar trade and look at a number of other risk factors to a certain business. We’re sharing the power of Allianz’s insights around flood, subsidence and theft risk, for example, so that our brokers can spend less time trying to find this information and preparing for client interactions and more time actually having them.” 

Softening market opportunity

One aspect of underinsurance that makes it such a stubborn problem for the sector is cost constraints. 

While insurance coverage is incredibly valuable, it is often not front of mind for SMEs struggling to make ends meet. For example, Allianz UK’s research showed that, of 248 surveyed businesses that had either reduced or not updated their coverage, 25% cited cost concerns as the primary reason for doing so, while another 14% cited financial constraints. 

Ktenidis explains: ”It’s really hard being an SME today and insurance is not top off the list – often they’re thinking about hiring or cash flow or paying the next bill, so that risk of a crisis event does seem a way off because of other priorities.

“That’s why it’s so important for brokers and the rest of the trusted ecosystem of advisors to collaborate and make sure SMEs really understand the challenge.” 

One area of opportunity, where price or cost constraints are concerned, is the softening market. 

According to the inaugural Insurance Times Commercial Lines Premium Index, in association with software house Open GI, average premiums in the first quarter of 2025 saw an 11% decrease compared to the same period last year, with all regions except the south west experiencing price drops.

Where prices drop, brokers can take the opportunity to communicate the advantages of insurance more effectively.

Ktenidis finishes: ”There is absolutely an opportunity to have better conversations as prices comes down and for clients to see more coverage.But, even though I see it as an opportunity, we’ve got to make sure that we’re having the right conversations and acknowledge that we’re doing that in the context of SMEs continuing to feel strained in terms of their cost base and other, broader challenges.”