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UK SME Insurance: Distribution Dynamics 2018

UK SME Insurance: Distribution Dynamics 2018

Summary

UK SME Insurance: Distribution Dynamics 2018, report looks at how SMEs buy insurance coverage and the reasons behind their purchasing decisions. It also examines the services SMEs are currently receiving and the additional services they would like from their provider going forward. Other influential factors on the market are taken into consideration, such as the location of the business (home or on-site/office), the age of the business owner, and the age of the business.

Brokers remain the most utilized channel among SMEs purchasing insurance, yet their share of the market suffered a decline in 2018 for the second year running, according to our 2018 UK SME Insurance Survey. SMEs have begun to purchase their insurance products via a number of different channels, with price comparison sites making gains and banks re-emerging as a channel over the past couple of years. Purchasing directly from the insurer saw a surprising fall in 2018 following consistent growth, but it remains a key channel, especially for smaller SMEs. Insurance companies also continue to provide an increasing variety of products that cater more specifically for the smallest of SMEs. Given that businesses of this size represent the majority of SMEs by number, the growth of non-brokered purchasing channels is unsurprising.

Scope

  • Loyalty is high, with auto-renewal being the leading method of purchasing insurance (41.8% of respondents).
  • Renewal rates in commercial insurance are significantly higher than in personal lines. Over 80% of SMEs either auto-renewed at the renewal point or remained with their insurer after comparing prices.
  • Younger businesses are embracing technology when purchasing their insurance, with the use of tablets and smartphones highest among businesses that have operated for less than two years.
Reasons to buy
  • Identify the most prominent sales channel for SMEs.
  • Adapt/re-evaluate your distribution strategy and proposition to meet the needs of modern consumers.
  • Discover the factors influencing SME purchasing decisions and distribution channel selection.


  • Executive Summary
    • Market summary
    • Key findings
    • Critical success factors
  • The SME Purchasing Journey
    • Introduction
      • SMEs make up the backbone of the UK economy
    • Price comparison sites and banks challenge brokers' dominance
      • Table Figure 1: Banks and PCWs pick up broker and direct business in 2018
      • Broker popularity increases as the size of the business grows
        • Table Figure 2: The dominance of brokers increases with the size of the company
      • Micro businesses are moving from the direct channel to comparison websites
        • Table Figure 3: Micro insurers have been veering away from brokers in recent years
        • Table Figure 4: Brokers are losing share in the sole trader market but remain a leading player in the majority of lines
        • Table Figure 5: Micro businesses (excluding sole traders) prefer the broker channel in 13 out of 16 products
      • Small businesses moved from the direct channel to price comparison sites and banks in 2018
        • Table Figure 6: Brokers bounce back in the small business category
        • Table Figure 7: The broker channel remains dominant among small businesses
      • The bancassurance channel is strongest among medium-sized businesses
        • Table Figure 8: Brokers remain dominant among medium enterprises, but their gradual annual decline continues
        • Table Figure 9: Medium-sized businesses prefer brokers for every product, but other channels are emerging
      • SMEs predominantly auto-renew policies across all business sizes
        • Table Figure 10: Auto renewal is the most popular for all size categories
        • Table Method of purchasing insurance by SME size category, 2018
      • Young companies are embracing the use of technology
        • Table Figure 11: Businesses are more likely to switch, and use online methods, in the first couple of years of operation
      • Face-to-face purchasing increases in popularity in line with the age of the business
        • Table Figure 12: Auto-renewal leads the way for established businesses
    • SME pre-purchase activity shows a retention-heavy market
      • SMEs' primary action at renewal is to call their existing providers
      • A significant percentage of SMEs conduct research on price comparison sites
        • Table Figure 13: Contacting existing providers remains the most common action
        • Table SME pre-purchase activity by category size, 2018
  • SME Retention
    • Larger businesses are more likely to renew their existing policies
      • Table Figure 14: Larger businesses are more likely to renew their insurance policies
    • Sole traders compare prices at renewal, but rarely change
      • Table Figure 15: Comfortably over 50% of sole traders stay loyal to insurers in every product line
      • Table Figure 16: Vehicle-based lines are most at risk of sole trader customers switching
    • Micro enterprises (excluding sole traders) have a high retention rate
      • Table Figure 17: An average of 74% of micro businesses (minus sole traders) renew policies
      • Table Figure 18: Micro businesses are unlikely to switch public and employers' liability policies
    • Small enterprises are more likely to auto-renew than compare prices
      • Table Figure 19: On average, 82% of small enterprises renew policies
      • Table Figure 20: Small businesses are most likely to switch in the more common property and single motor lines
    • Medium enterprises show a high degree of loyalty to providers
      • Table Figure 21: An average of 82% of medium businesses also renew, but a higher proportion do it automatically
      • Table Figure 22: Switching rates are lower among medium businesses, with vehicle-based products still the most likely
      • Table The actions undertaken by SMEs at the time of renewal, 2018
  • Services Provided by Insurers
    • A simple policy explanation is essential, but larger SMEs prioritize full pay-outs
      • Table Figure 23: Micro insurers require ease of understanding and transparency
      • Table Figure 24: Smaller businesses focus on prompt and full payouts from insurers
      • Table Figure 25: Medium businesses are more concerned about receiving full payouts than prompt ones
      • Table Insurance services most valued by SMEs, 2018
    • The most common added-value service used by SMEs is legal advice
      • Table Figure 26: Legal advice remains the most used add-on
      • Table The percentage of SMEs receiving additional services, 2018
      • Openness to receiving services is dependent on SME size
        • Table Figure 27: Roughly three quarters of medium-sized businesses value all categories of add-on services
        • Table Figure 28: Sole traders have less demand for add-on services
  • Appendix
    • Definitions
      • SME
    • Methodology
      • GlobalData's 2018 UK SME Insurance Survey
    • Further reading
    • About GlobalData
      • Table Figure 29: About GlobalData

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