Small biz dream insurance must be simpler, more efficient, survey finds
What is needed for a “dream insurtech” that appeals to underinsured small and medium sized business owners (SMBs)?
Insurtechs should aim to make it easier and more efficient to buy insurance, stated Richard Clarke, chief insurance officer at Colonial Surety. “If an insurtech put together digital explanations of coverages and easy-to-grasp claims examples – if you could use the technology so it would have relevance to a broad range of smaller types of businesses,” he said, SMBs would find it easier to get insurance. Clarke added that he hasn’t seen this happen yet.
Richard Clarke, chief insurance officer at Colonial Surety.
“I don’t know that insurtechs perceive that they can make money doing that, but that’s certainly in the future,” he said. “That’s a definite possibility.”
As it stands, 90% of 500 small business owners surveyed by Wakefield Research for NEXT Insurance, said their businesses are not adequately insured. Among these business owners, 51% said they’re less than “very prepared” to face possible risks and 18% said they don’t plan to do anything in the next six months to better protect themselves.
AI and machine learning insurtech does exist to serve busy small business owners, according to Tim McDermott, director of insurance product management at NEXT, which specializes in insurance technology for small businesses. “Some insurtechs are simplifying all parts of the insurance experience, from underwriting to the purchasing process or filing a claim,” he wrote in a response to questions.
Small businesses need to see an effective cost-benefit factor from any insurance and insurtech services they use, according to Clarke. “The sheer numbers of insurtechs and what they offer does provide some hope for SMBs,” he said.
On the insurance side, Colonial Surety, a Woodcliff Lake, N.J.-based insurer that itself is smaller and more specialized than major property and casualty carriers, addresses SMBs needs with some unique offerings, according to Clarke.
“For example, multi-year policy terms dispel the issue of needing an annual policy. Multi-year policy terms help,” he said. “For small amounts of additional premium, we add in some critical coverages like cyber, that can be very beneficial. That’s appreciated by the small business. We focus on smaller businesses and make the purchase a little bit easier. We’re not necessarily offering catastrophic amounts of coverage, but more basic amounts of coverage in some critical areas.”
SMBs may need certain coverages that they are not aware of and confusion about what they need is another reason why they end up underinsured, according to McDermott. “It’s less to do with an issue that small business owners have with the insurance products themselves and more to do with a lack of understanding of the types of coverage they need,” he wrote. “Business owners often need a range of policies to protect their businesses, from general liability to commercial property and beyond. Each policy covers a different aspect of your business, and it can get confusing fast.”
Just over half (53%) of respondents to the NEXT-sponsored survey said knowing what coverage they needed is their greatest barrier to getting insurance. Only one-third of respondents end up seeking professional help with insurance needs.