A glance down any high street in the UK serves as a reminder of the critical role small-to-medium enterprises (SMEs) play in creating varied and sustainable communities.
However, all too often, it’s easy to think of risk in the context of large corporates - whether it’s around cyber, business interruption, climate change or economic uncertainty. The reality, however, is that SMEs account for 61% of UK employment, according to UK Parliament statistics released in May this year, and the onus is on the insurance industry not just to cover the risks facing these businesses today, but also to evaluate how they are evolving amid broader financial, technological and geopolitical considerations.
This is where the role of the insurance broker comes into its own as they look to support their customers by ensuring they’re obtaining coverage terms that match their evolving risk profiles. But between inflationary and cost-of-living pressures, the need to find the right terms and conditions at the right price is more pressing than ever – and SME brokers are on the frontline of navigating that balancing act.
Among the top challenges impacting brokers today, digitalisation and the advancement of new digital technologies are a core consideration. Faced with the requirement to adapt to and utilise these technologies so they can meet customer expectations, stay ahead of emerging digital risks and adjust to the changing regulatory environment, brokers require more support than ever in order to remain competitive and support their SME clients.
From her perspective as SME portfolio director at Aviva, Rebecca Gambrell (pictured) is seeing that brokers are increasingly looking to expand their digitalisation strategies. She noted that it’s incumbent on insurers to engage with these brokers and to set up the right support channels to help them understand which risks they can place digitally.
As with operational change, the speed at which brokers are embracing this digitalisation journey varies from one to another. For some, this is a monumental step-change in the way they do business - while for others, it’s just the next step in a wider digital transformation strategy. “With smaller brokers, they’re actually more engaged because it makes everything more efficient for them.
“Sometimes it’s harder when you’ve got a larger broker but, again, it’s about having the right conversations with them and helping them along that journey… [As an insurer], the answer is to make ongoing investments into your digital products and to keep them up to date. And that’s where broker engagement is key because that’s how you understand where they’re having difficulties and help to take those away.”
Another pressing challenge facing the insurance broking sector is the growing spectre of underinsurance as the cost-of-living crisis is further compounded by concerns around data quality and maintaining effective communications with clients. Aviva’s recent Broker Barometer survey revealed three in four (73%) brokers worry about clients being underinsured, with inflationary pressures cited as a primary cause.
With millions at risk of underinsurance, offsetting this risk is clearly going to require a new tool in brokers’ toolkits – with data-driven insights fast-emerging as the most likely solution. For Aviva, this saw the introduction of a new quotation tool, leveraging Named Entity Recognition and GenAI to analyse brokers’ commercial SME presentations.
Having the right partnerships across the insurance ecosystem is also instrumental to ensuring that brokers are equipped with the right tools, products and solutions to support their insureds, and for Gambrell and her team, keeping these partnerships healthy, transparent and evolving is key. “We recognise that at the end of the day, it’s brokers who are there to advise the customer and support them in their insurance needs,” she said. “So, we need to do everything we can to make that easier.”
