Insurance for small and medium enterprises (SMEs) has a reputation for being complicated, opaque, paper-intensive and expensive. Many SMEs believe that they get poor service and value for money from insurers; they’re also frustrated by one-size-fits-all products and the amount of time and administration it requires to get some basic coverage.

By Francois Potgieter, MD of Bi-me (Business Insurance Made Easy)

The complexity of this field means that many SMEs are underinsured or that they don’t have appropriate cover for their needs. Brokers play an invaluable role in this landscape, helping clients to navigate the nuances of insurance with advice and information. In most markets, including South Africa, around 70-80% of commercial insurance still goes through intermediaries.

Yet in a world where business owners can research and buy a wide range of goods and services online, and where insurers can automate processes from underwriting to claims, the days of the old-fashioned approach to insurance are numbered. SME owners are starting to demand that brokers and insurance companies reduce the time and admin burden they face in researching policies and gathering quotes.

A new role for the broker

Even though this landscape has created the opportunity for insurers to do more business directly with SMEs, we still see a strong role in the market for commercial brokers that make effective use of digital channels and automated systems to serve their customers. These insurance platforms can succeed by offering compelling digital experiences, backed with personalised advice and support for SMEs.

Benefits of dealing with a digitally-enabled platform for SMEs include:

* An independent digital insurance platform allows them to get and compare quotes from multiple providers within minutes, rather than needing to get separate quotes from each insurer on the phone.

* SMEs can get multiple types of cover–professional indemnity, public liability, contractors’ all-risk, vehicle, buildings and more–from multiple providers and manage them in one website or app interface.

* Such a platform lets SMEs customise insurance to suit their business’s needs and budget with support throughout the quoting journey to help them make informed decisions.

* It’s possible to get a quote and buy cover in matter of minutes, with no paper forms to fill in or long phone calls.

* SMEs will benefit from advice as well as support with their claims if they need it.

This is just the beginning of digitalised commercial insurance

Over the years to come, we’ll see SMEs in South Africa turn online for more and more of their insurance needs. We can expect digitalisation to open up some innovative insurance models, such as pay-as-you-go coverage and embedded insurance. For example, we could see companies pay vehicle insurance by the kilometre, so that it costs less in months where they don’t do as many deliveries.

Embedded insurance offers numerous opportunities for SMEs. We could see accountants or business software providers offer insurance to their SME clients as part of a portfolio of business solutions. Or SMEs could sell through insurance to their customers as part of their offering. Consider a small ecommerce store selling an insurance product along with a smartphone, for example.

Brokers that embrace the technology will thrive in this environment because they can offer clients the best of both worlds: the efficiencies, reach and transparency of digital and the human touch and advisory element of the traditional model. Given that we’re just at the start of the digitalisation of SME insurance, exciting times lie ahead for brokers and their customers.