SMEs are core to our communities and our economy, making up 99% of businesses in the UK.
Despite their importance, however, many essential financial services products – such as insurance – are designed without the varied needs of this market in mind. Serving a diverse range of customers is often seen as costly and complex, so this group of businesses can be neglected as a result. According to data from Sedgwick, this has contributed to a shocking 80% of SMEs being underinsured.
For example, the cover requirements of a hair salon differ significantly from those of a roofing firm. Yet many traditional insurance providers offer a ‘one size fits all’ approach that doesn’t take the individual risk factors of each business into account. Salon owners may be asked if they need cover for “working at height” during their quote process – an irrelevant question that would provoke confusion at best. Unnecessary cover options may also be priced into the package, meaning the policyholder is paying for cover they don’t need.
How do we fix this issue? By bridging the support gap and providing the right products, we can help ensure the success of SMEs and unlock their full potential.
Founded on technology
Small businesses are experts in what they do but the world of insurance can look unclear and complex to those who are not familiar with it. Of course, price is a critical aspect and competitive rates will remain important. But we know that a transparent, user-friendly purchase journey is also key.
As such, one of the Ripe central design considerations was to make our process simple to understand, without any unnecessary jargon. We allow customers to tailor their product based on their needs and ensure their coverage is appropriate to their individual business.
This not only provides clarity about the policy but helps to alleviate time pressures – business owners can build a quick quote in seconds and buy a policy online in minutes. Stripping out unnecessary cover options also means that the policyholder gets the most competitive price for their business.
Our custom-built proprietary platform, Juice, allows us to create these highly customised insurance journeys and make the buying process easier for users. We believe that to better serve this market, innovative technology must be the foundation for everything.
Adding extra value
SMEs are likely to face tighter budgets this year as higher interest rates, VAT thresholds and increased energy and labour costs persist. According to the latest report from the British Chambers of Commerce, almost half (47%) of its members expect to raise their prices this quarter.
Insurance providers are therefore under greater pressure to deliver added value beyond the day-to-day. This could be offering resources and advice for small business owners, developing technology solutions that serve SMEs better, or redesigning products to make them more effective and efficient for this market. Ultimately becoming a trusted partner rather than a faceless service provider.
The future of SME insurance
Insurance has been failing SMEs for too long. An overly uniform approach has left the sector underserved – but with new technological advances that allow us to treat customers as individuals, we can improve. Those who don’t, rightfully, will be left behind. It is incumbent upon all of us working in the sector to rethink how we are proactively supporting our SME customers. By bridging the technological gap and fostering a supportive ecosystem, we can unlock the full potential of SMEs as catalysts for future growth and prosperity.
Article by Paul Williams, CEO of Ripe
