Insurers need to do all they can to retain SME customers says data analysis firm

Following the ‘Dear CEO’ letter published by the FCA’s interim chief executive Christopher Woolard last week, data analysis firm GlobalData has said that “insurers need to do everything they can to retain” small to medium-sized enterprise (SME) customers currently battling with business interruption (BI) claims.

Ben Carey-Evans, insurance analyst at GlobalData, explained: “The FCA informing insurance leaders that BI claims for SMEs should be assessed and settled quickly will come as a boost to the small to medium enterprise (SME) sector.

“The FCA has also stated that if there are reasonable grounds for not paying out in full, insurers should pay out interim payments, meaning that some SMEs should receive some much-needed funds imminently.

“GlobalData’s 2019 UK Insurance Consumer Survey found that the uptake of BI has been increasing over the past few years. It has risen from a penetration rate among SMEs of 11.1% in 2015 to 17.3% in 2019. This means that a significant number of existing policies will be up for renewal in 2020, and insurers need to do everything they can to retain these customers.”

However, Carey-Evans added that it is “a blow to many SMEs” when insurers will not pay out if policies do not have pandemic clauses, despite this step being supported by the FCA.

Carey-Evans emphasised that communication between insurers and SMEs is vital, especially in order to help businesses manage their cash flow.

He continued: “The key for insurers is clear communication with SMEs. Smaller businesses will likely be desperate for cash flow, so communicating whether they are receiving a partial or full pay out, and when, is essential.”