Our latest SME Insurance Survey finds one in three micro-enterprises buy insurance direct, with AXA benefitting most. But with issues in trading commercial cover direct, increasing channel competition, and brokers fighting back, it’s getting tough.
It is no secret that the direct channel within the UK SME insurance space offers significant opportunities, at least in attracting the attention of the smallest of businesses. The cat is clearly out of the bag, with Travelers entering the arena as of June this year to join AXA, Allianz, and Hiscox as well as Aviva, which continues to dip its toe in the direct space.
It is by virtue of a multi-channel approach that AXA emerged from our latest SME Insurance Survey (conducted in August 2016) as the most selected brand by micro-enterprises across a significant majority of product areas. In employers’ liability, a bellwether for the non-sole trader segment, AXA was chosen by 13% of micro-enterprises to take first place. However, it is not necessarily plain sailing ahead for AXA or its fellow direct-insurance competitors.
First, as mentioned, the commercial direct space is becoming increasingly competitive. Not only are players turning their hand for the first time or expanding available products within direct insurance, but the strongest incumbents – AXA, Allianz, and Hiscox – continue to strengthen their propositions.
Second, brokers are – and should increasingly be – fighting back. This year’s survey found that, as a channel used for “the majority of your insurance,” the broker channel has actually clawed back market share against direct. Just as the broker channel combatted price comparison sites on an “if you can’t beat them, join them” basis, brokers need to develop their own sleek, online direct-esque propositions. Embracing a digital-first strategy can pay dividends for intermediaries.
Third, and by no means least, is that insurers are opening themselves up to inherent issues in trading complex products directly. There is a danger of companies lacking the requisite information to make an informed decision on their cover. For example, 12% of surveyed micro-SMEs found public liability cover difficult to understand – and this is among those who knew to purchase such cover. This final point is a key factor to consider for all low-touch propositions as we move forward.
By Stewart Mcewan, Head of Content, UK General Insurance