To escape commoditisation commercial insurers must remember -businesses are run by people
Across sectors, we’ve talked a lot about recognising customers’ genuine needs in order to meet their growing expectations of products and services. Commercial lines is no different, and the intimate connection provided by the broker-client relationship means insurers are uniquely placed to do so.
In the UK, SMEs make up 99% of all businesses, providing 60% of employment. 96% of all businesses are, in fact, micro-businesses with fewer than 10 employees. At that size, and even as scale increases, people, more than anything else, are critical to business success. They’re the decision makers, the customer empathisers, the systems enforcers. However, they’re only human; they make mistakes; they need help; they relish relationships. So, for those organisations that can connect with the people behind these businesses, there’s a huge opportunity to not only help them flourish but, in turn, to flourish themselves.
Currently, the compulsory nature of many commercial insurance products means that they are viewed simply as a utility. Another thing for the business owner or department head to worry about whilst balancing other drains on their resources.
Escaping this commoditization can begin with what, in the circumstances, might seem a glib question: “Why hold commercial insurance?” In much the same way as a retail policy is less a piece of paper and more ‘peace of mind’, commercial policyholders do not have insurance because they want an intricately worded legal document. They have insurance because they are trying to be most effective in their job; they are trying to run a successful business.
With that in mind, we can ask ourselves a more helpful question, one that reframes the role of commercial insurance: “What can we do to help each business, and the employees within, be as successful as possible?” Doing so allows underwriters and brokers to step outside of the current ‘we’ll be there when things go wrong’ relationship and recognise that they are in fact, in a position to empower the people that drive these businesses.
Simply Business have been taking the first steps towards meeting these needs for the last 10 years. Combining broad market access with a rapid quote service allows them to give business owners more of that precious resource — time. However, behind that still rests very familiar insurance products.
A deep understanding of the challenges that businesses and their employees face unlocks the potential for something bigger than simply another policy document. The creation of new insurance-powered services that meet the diverse needs of commercial policyholders.
Imagine, if you will, a business looking to expand into a new retail space. That business, the business owner and the employees face a multitude of challenges and admin woes to complete the task. So, instead of simply providing liability and office insurance for the new premises (just another thing for someone to have think about), an insurer begins offering a ‘new branch service’. The service provides peace of mind by, yes, including an insurance policy, but also, amongst other things, ensuring the premises is properly secured, arranging for the transport of any equipment and dealing with any necessary paperwork. All the little things are taken care of, allowing the business to focus on actually making a success of opening the next branch.
Munich Re’s recent acquisition of drone investigation and data analysis business Betterview could prove an interesting step if they are able to use the latter’s skills to provide, for example, security updates on multiple premises. For the moment however, it feels more likely that they will start by bolstering their risk assessment process.
The proximity to policyholders afforded to insurers by broker relationships offers a unique perspective on the challenges facing businesses and the people that power them. This understanding should, in turn, be used to power innovation that moves past improvements to the efficiency of the underwriter-broker relationship to create products and services that solve problems for the end customer. Particularly with the proportion of SMEs set to grow in the coming decade, it’s only a matter of time before other service providers spy opportunities, so now is the time for commercial underwriters to act.
