2009-11-11 14:36:02 -
Research and Markets ( www.researchandmarkets.com/research/72f507/targeting_smes_in : 
) has announced the addition of the " Targeting SMEs in UK General Insurance 2009 : " report to their offering.
This report provides a unique evaluation of the purchasing behavior of SMEs based on Datamonitor's exclusive SME survey, giving the reader an edge in this dynamic area. The report also explores how
SME's attitudes differ depending on size, allowing for more precise targeting of market segments.
Scope
- A detailed look into SMEs' insurance purchasing patterns by company size
- An evaluation of the potential for growth for direct insurers and bancassurers in the SME sector
- Action points detailing potential strategies for different providers wishing to target SME business
Highlights of this title
- Of the SMEs in Datamonitor's survey, 46.0% indicated that they purchased just package products in 2008. The popularity of package products reflects the success of simple packages like shops and offices policies that can accommodate a broad range of risks, but also the more niche products designed for specific trades, such as the motor trade.
- Overall, 34% of the SMEs surveyed were willing to consider arranging their insurance over the telephone. Of those that were willing to consider a telephone arrangement, 51.0% cited speed as a reason why they would.
- A majority of SMEs that would buy online were inclined to purchase less complex products such as public or employers' liability, or commercial motor.
Key reasons to purchase this title
- Improve customer retention by understanding SMEs' reasons for staying with a provider, as well as their reasons to switch providers
- Boost customer acquisition by understanding what insurance products SMEs are willing to buy online and via the telephone
- Understand the current competitive environment of the SME sector in relation to competitor strategies and current distribution trends
Key Topics Covered:
Executive Summary
- The SME market is attractive for its sheer size, though the recession will have an impact
- The SME market was estimated to be worth £5.4 billion in 2008
- The recession has put pressure on SMEs and is resulting in more insolvencies
- Package products are the principle means through which SMEs purchase their cover
- SME insurance needs are varied and encompass a range of products
- Face-to-face arrangement through established brokers is the main means by which SMEs arrange their cover
- Brokers dominate among all sizes of SMEs, though they have greater market share among larger SMEs
- Face-to-face arrangement is popular in the market but is more prevalent among larger SMEs
- Most SMEs learn of their insurance provider through previous experience or proximity
- SMEs are generally loyal to their existing insurance provider but there is significant churn to exploit
- More SMEs considered a change of provider in 2009 than in 2008
- Approximately one third of the SME insurance market would be willing to arrange their cover over the telephone
- Most of the SME market is unwilling to use the internet to arrange their insurance cover
- SMEs are most open to purchasing motor and less complex liability products online
- Insurance providers need to make the necessary investments so they can offer quality low cost products
- The recession will make SMEs more price sensitive, requiring brokers to invest in the ability to deliver at a lower cost
- Direct players need to play up the potential cost savings which an SME can obtain from going direct
- Banks can market themselves as low cost alternatives, appealing to SMEs' price sensitivity
Market Context
- Introduction
- The SME market was worth over £5 billion in 2008, with rates hardening in motor
- The SME market was estimated to be worth £5.4 billion in 2008
- A large proportion of brokers reported no change in premium rates over the last year
- The SME market is attractive for its sheer policy volume, though the recession will have an impact
- The number of UK enterprises grew by 4.7% to 4.8 million
- More than 99% of UK companies are small businesses
- The recession has put pressure on SMEs and is resulting in more insolvencies
- SMEs often require a range of cover, generating a wide range of premiums for insurers
- Package products are the principle means through which SMEs purchase their cover
- SME insurance needs are varied and encompass a range of products
- SME insurance policies can vary considerably in value, depending on the size of the risk
- Affinity propositions are increasingly targeting the SME market
- Traditional affinity partnerships in the SME market have been based on trade associations
- There has been significant interest from some personal lines affinity players in distributing SME insurance
- Two high profile affinity partnerships have announced their expansion into the SME insurance market
- Kwik Fit has teamed up with Moorhouse to target SMEs
- Heath Lambert and Fortis announced a deal to distribute SME insurance through the Post Office
- Several insurers have adapted their SME broker offering, reflecting the competitive nature of the market
- QBE has rolled out a range of online SME products
- MMA reworked and relaunched its SME product range
- Chaucer made changes to gear up for an SME push
- RSA is aiming to increase its SME market share with better and faster service
- SME insurance giant Aviva closed its direct commercial operations, concentrating on broker distribution
- Brit Insurance expanded its SME product range with a new PI product
- Allianz Commercial is targeting growth in SME business in Scotland
- The motor trade has attracted a great deal of attention for those insurers looking at growth in the SME market
- AXA redesigned its motor trade product
- NIG is focused on the medium-sized motor trade business
- MMA launched a new motor trade internal risks product at the start of 2009
- Many brokers have organic or acquisition driven growth ambitions for the SME market
- AXA rebranded Venture Preference and continued to add to it with acquisitions
- Swinton has identified growth in the SME market as a priority, supported by its consolidation activities
- Swinton has approached nearly half of the respondents of a Datamonitor broker survey with an offer for their business
- Aon launched a credit insurance service to SMEs and acquired the specialist broker Supercover
- Marsh is reaching out to regional brokers in an SME push
- A new consolidator is looking to create a leading SME insurance presence
- Broker Direct has also announced a number of acquisitions, and Our Network has expanded rapidly
- JLT has acquired Ingham & Co to add range to its Thistle Underwriting platform
- Broker-owned MGAs have become a common feature in the commercial insurance market
Distribution Dynamics
- Introduction Face-to-face arrangement through established brokers is the main means by which SMEs arrange their cover
- Brokers dominate among all sizes of SMEs, though they have greater market share among larger SMEs
- Face-to-face arrangement is popular in the market but is more prevalent among larger SMEs
- Most SMEs learn of their insurance provider through previous experience or proximity
- SMEs that are clients of direct insurers, are more likely to have used the internet or a mail shot to learn about their provider
- SME insurance providers are generally good at achieving high levels of customer satisfaction
- SMEs are generally happy with their insurance provider
- SMEs tend to prefer longstanding relationships with their providers, making an initial pitch critical
- After their first year of trading, approximately one fifth of SMEs with insurance change their provider
- Whilst SMEs generally value provider advice, medium-sized companies are particularly receptive to it
- Clients of direct insurers value advice the least
- Clients that arrange their insurance face-to-face are most keen to receive advice
- When choosing a provider, SMEs value good service almost as much as price
- SMEs are sensitive to price, regardless of their size
- SMEs that purchase online appear to be the most price sensitive
- SMEs that are clients of direct insurers are more likely to have chosen their provider on the basis of price
- Many SMEs rely upon their insurance providers for extra services
- The majority of SMEs receive some services from their insurance providers, with legal advice the most common
- Micro SMEs are less likely to use extra services from their provider, though legal advice is most common
- Most SMEs that receive additional services from their insurance provider do so for free
- The most desired services are risk management and legal advice
- Approximately one fifth of SMEs that do not receive extra services are interested in obtaining them
Potential Switchers
- SMEs are generally loyal to their existing insurance provider but there is significant churn to exploit
- Approximately one fifth of respondents started their relationship with their provider in the last two years
- SMEs that have been trading for five to 10 years have typically been with their provider the longest
- Banks had acquired the largest proportion of new business in the SME insurance sector
- Price was the major driver behind SMEs switching their insurance provider
- The number of SMEs thinking of switching has risen to higher, historic levels
- More SMEs considered a change of provider in 2009 than in 2008
- A variety of companies, from different industries, believe they will change their provider over the next year
- SMEs that use the internet to arrange their insurance are the most likely to search out a new provider
- Price is the leading reason why SMEs think that they will change insurance provider
- SMEs are open to alternatives to face-to face distribution, though the majority still require convincing
- Micro SMEs are the most open to buying their cover over the telephone
- Approximately one third of the SME insurance market would be willing to arrange their cover over the telephone
- Micro SMEs are attracted to the speed and expected cost savings of telephone arrangement
- The internet is attractive to SMEs due to its convenience
- One third of SME insurance buyers would be willing to arrange their cover online
- Micro SMEs are more likely to consider arranging their commercial insurance online
- Most SMEs remain opposed to telephone arrangement, though their reasons are varied
- The fear of not obtaining the proper cover and expert advice is holding most medium-sized SMEs back from the telephone
- Most SMEs prefer the personal contact of face-to-face arrangement rather than the speed of the telephone
- Two thirds of the SME market would not consider an online sales process when arranging their cover
- Most of the SME market is unwilling to use the internet to arrange their insurance cover
- Medium-sized SMEs are the least likely to consider an online option
- Of those SMEs willing to buy insurance online or via the telephone, liability products were the most popular
- SMEs are most open to purchasing motor and less complex liability products online
- Micro SMEs were most likely to consider purchasing public and employers' liability over the internet
- Banks and direct insurers can sell into a sizable minority of SMEs but still need to convince most to give them a chance
- Approximately one third of SMEs will use a bank as their insurance provider
- Micro SMEs are willing to buy their insurance from a bank if the price is cheaper
- Almost a third of SMEs are willing to arrange their insurance through a bank
- The majority of SMEs are willing to purchase their cover direct
- Almost two thirds of micro SMEs are open to buying their insurance direct from an insurer
- Cost savings are the main drivers behind SMEs' willingness to consider a direct insurer
- There remain significant obstacles to many SMEs considering banks as viable insurance providers
- Medium-sized SMEs view banks as lacking expertise and reputation
- SMEs are generally content with current providers and doubt banks have the expertise to sell insurance
- Direct insurers face less opposition but still have several issues to address
- Direct insurers still have to overcome SMEs' current contentment
- Medium-sized companies retain doubts about the direct insurance channel
Action Points
- Brokers can focus on delivering services and low cost products
- The recession will make SMEs more price sensitive, requiring brokers to invest in the ability to deliver at a lower cost
- Flexibility and understanding during the recession can prove beneficial
- Face-to-face arrangement is popular but investments in online and call center distribution can yield additional business
- Legal advice and risk management are the key additional services to offer to medium-sized SME clients
- Direct players need to target smaller SMEs and address their perceived faults
- Direct insurance players are well suited to the micro end and should focus on these customers
- Direct players need to play up the potential cost savings which an SME can obtain from going direct
- Stepped up advertising campaigns are necessary to drive consumers to a direct insurance operation
- Direct players need to highlight the convenience and relative ease of their distribution platforms
- Banks need to address their image as expensive providers with no expertise to break into the micro SME market
- Banks can market themselves as low cost alternatives, appealing to SMEs' price sensitivity
- Targeting micro SMEs and start-ups would exploit some of banks' natural affinities
- Banks need to reinvest in their overall reputations, which appear to have suffered among SMEs
APPENDIX
Companies Mentioned.
- AXA
- Fortis
- HSBC Holdings plc
- Jardine Lloyd Thompson Group plc
- Lloyds Banking Group plc
- London Stock Exchange Group Plc
- RBS Insurance
For more information visit
www.researchandmarkets.com/research/72f507/targeting_smes_in :
Source: Datamonitor
Research and MarketsLaura Wood, Senior Manager,
press@researchandmarkets.com : mailto:press@researchandmarkets.com U.S.
Fax: 646-607-1907Fax (outside U.S.): +353-1-481-1716
