With small businesses growing dissatisfied with traditional cover, insurers should look to data integrations to create new propositions that better meet their customers’ needs.
For small businesses, the world is changing faster than ever. In the wake of COVID-19, business owners are having to quickly adapt their operating models to stay afloat, with ever more challenges posed by economic uncertainty, inflation, and the threat of a new recession. In this environment, traditional insurance policies based on static levels of cover are becoming irrelevant to digital-first businesses.
Despite the persistent risk small businesses face, it’s estimated that nearly 50% in the UK are underinsured, a problem that is replicated around the globe. Without adequate cover in place, small businesses are overexposed to unexpected loss events, making it almost impossible for them to recover.
At the heart of the underinsurance issue is the fact that traditional twelve-month policies are no longer relevant to businesses that often make significant changes within a policy period. Business owners are now searching for more modern coverage solutions that meet their demands for flexibility and accommodate the digital-first landscape most are operating in.
Insurers need to help businesses by evolving their approach to better meet the needs of their customers.
By building new propositions that leverage real-time connectivity with the software small businesses use every day, insurers can create new and dynamic business models that deliver more flexible cover and transform the customer experience.
Why small businesses are dissatisfied
The global pandemic laid bare many of the pain points surrounding traditional insurance such as:
- The lack of personalization and flexibility due to fixed 12-month policies
- Outdated approaches to customer experience in a digital age
- Static levels of cover in an ever-changing world
Now, with inflation on the rise and rumors of another recession circulating, business owners need a more dynamic insurance model that addresses these pain points to increase their chances of survival. Here’s what insurance providers can do to optimize customer experience, protect businesses, and create stickier relationships.
1. Offer greater flexibility and personalization
When it comes to insurance, one size does not fit all. While complex, annual contracts are more cost-effective for large enterprises, today’s businesses are looking for simplified contracts and the ability to pick and choose their cover. In fact, 47% percent of small businesses prioritize flexibility when it comes to product coverage.
During a recession or periods of high inflation, cutting down on superfluous coverage allows businesses to trim their overhead and conserve precious cash flow while ensuring they’re adequately protected in the areas that matter most like liabilities, cyber threats, and business interruption.
Leveraging data integrations can help insurers offer more flexible cover.
Not only does this present a huge opportunity to drastically simplify propositions and improve customer experience, but it also offers insurers the chance to use connected propositions to create more productive partnerships and affinity discussions with the major small business ecosystems.
The likes of Amazon and PayPal have already started distributing insurance products to their clients. However, the brokers and insurers involved have missed the chance to transform the insurance proposition by enabling a fully connected and integrated experience for merchants. This is a huge opportunity for forward-thinking insurance carriers and brokers.
2. Offer better pricing and risk selection
Part of offering more flexibility to customers means offering better pricing. Among SMEs, 57% say that getting good value is the most important factor in selecting insurance products. Using real-time data offers insurers the ability to offer truly pay-as-you-go cover that grows or declines in line with their requirements.
It also enables insurers to transform their underwriting processes through tailored insights into how their customers run their businesses. This allows underwriters to better understand different risk profiles and price the risk more effectively, with a more detailed and personalized understanding of the individual nuances of each small business.
3. Provide a superior customer experience
Traditional insurance applications and customer journeys are time-consuming and painful for small businesses. Insurers and brokers should be making it easier for small businesses to use their own data to simplify the application process and make sure the cover being sold fits the need of the customer.
By connecting directly with their customers’ financial and eCommerce platforms, insurance providers can create customer-centric application processes. This not only makes it easier for SMEs to get the cover they need, but it also transforms the underwriting process and enables providers to offer dynamic, personalized cover.
How Codat can help
At Codat, we help you connect to your customer’s tech stack and access real-time data from all the major accounting, commerce, and banking platforms. Through these integrations, you’ll be able to understand key SME rating factors such as turnover, wage roll, and profits, in addition to a wealth of other business-critical information that will help you digitally transform your underwriting process, offer better risk pricing and selection, and increase renewal rates by providing your customers with the services they actually need.
From a technical standpoint, our universal API helps you save the time and money you’d spend building in-house by providing you with an impressive library of integrations that includes major players like Xero, QuickBooks, Shopify, Square, and more. Along with building out the latest data integrations, our in-house development team is responsible for testing, maintaining, and scaling all existing integrations—taking on the heavy lifting so that you can dedicate your expertise to building insurance propositions that deliver the most value for SMB customers during uncertain times.
We also help support your distribution efforts. By building connected insurance products, you’ll gain access to our data partners’ SMB customers, expanding the audience your products reach.
Find out more about Codat’s integrations and give your customers the dynamic services needed to contend in a digital world.