A face-to-face broker service is no longer enough for today’s SME’s
For many years brokers have dominated the SME commercial insurance market, traditionally conducting business face-to-face or over the phone.
According to the latest research from DVL Smith and Datamonitor though, this single channel approach no longer resonates with the the way customers want to buy. The results from both surveys were very similar.
Insurance software for brokers must support multi-channel distribution
In the DVL Smith survey, SME’s were asked to identify the channels they had used to purchase or renew their commercial insurance over the last 12 months. The results demonstrate that SME’s are using a variety of channels (see chart below).
It also shows clearly the emergence of the online channel, with 25% of SMEs claiming to use it when buying or renewing their business insurance. Furthermore, 45% of SMEs claim they will be purchasing some or all of their commercial insurance online in the next 12 months – an 80% increase from the 25% who do so currently.
At the same time, according to Datamonitor, 49% of SME’s are more comfortable arranging their insurance on the phone.
When looking more closely at the 75% of SME’s not buying online, another picture emerges.
There is in fact a group within this, constituting 23% of the SME market, who are researching online prior to making a purchase offline (by phone or face-to-face). The Datamonitor study claims that 29% of all SME’s start their business insurance purchase journey online. Whilst the final transaction may be taking place offline, the online channel is going to be influencing the decision.
When you combine the two groups of ‘online customers’, we see that almost 50% of SME’s are shifting away from using the more traditional channels. In a market that is becoming increasingly competitive, can brokers really afford to ignore this sizeable segment of ‘online customers’?
Today’s reality is that brokers must have an appropriate online presence to attract and satisfy the needs of almost half of the SME market. In addition, the facility to quote, buy and self-serve business insurance will address the specific requirements of almost a quarter of the market today.
What does this mean for brokers?
The role of a broker remains important, and the emergence of the online channel does not signify the demise of the broker at all. SME’s are less educated about the more complex commercial insurance market, and thus less able to choose and buy their own insurance.
This will not change overnight, and for many customers it will never change. Indeed, almost 30 years after the launch of Direct Line, 30% of the Personal Lines market is still commanded by brokers.
The confusion that most SME’s feel about their business insurance will persist, and many businesses are a long way from being willing, or able, to choose their own insurance. It is therefore no surprise that the Datamonitor research states that 67.5% of SMEs consider brokers to be valued advisors.
Critically, SME’s are no longer using one channel and one channel only, so brokers need to realise that a single channel solution is no longer appropriate for today’s, or indeed tomorrow’s customer. Brokers that want to succeed in this market will need to embrace insurance systems that support multi-channel distribution, and use it to improve how they help SME’s in their decisions and purchases.
Today’s insurance systems need to support brokers online and offline
There is, and will continue to be, clear demand for more and better online services, but certain customers are still looking for more traditional forms of interaction via the phone or face-to-face.
It is quite likely that the proportion of SME’s looking to buy their business insurance this way will reduce as online propositions improve. However, most research concludes that there is a limit to how far the market will shift, as many businesses will still demand personal contact during the insurance buying process.
Brokers need to consider how they can seamlessly integrate their online and offline channels for customers seeking the benefits of both, ensuring they deliver a consistent message and experience across all channels.
Sources: Courtesy of Datamonitor’s ‘UK SME Insurance 2012’ and DVL Smith’s ‘Understanding SME insurance customers and their online behaviours’ (2011).