Accenture’s general insurance sector lead, Max Richter (pictured), has spent over 20 years providing insight into a wide range of subsectors from property and casualty to the Lloyd’s market to the retail SME sector.
His overarching perspective on the insurance sector has enabled Richter to understand the challenges facing each individual market segment over the course of the next year, and also the more general challenges ahead for the industry. There are several common threats that can be found in every market segment, he noted, including the challenge around talent attraction to the workplace and the various regulatory pressures faced by all the players within the sector.
When speaking recently with Insurance Business, Richter detailed the work done by Accenture to provide information when it comes to changing consumer demands from insurance and to uncover what consumers think about their financial services providers. An area which is seeing some significant movement, he outlined, is the SME sector, where more and more SMEs are starting to buy their insurance directly from providers.
“It is still a relatively small proportion of the overall SME market,” he said, “we’re still in the 20-25% range but it is a trend and there is momentum.”
There is a challenge there in how insurers will capitalise on that, he said, particularly when it comes to larger insurers working within the SME sector. Many of these businesses currently operate under a dynamic which involves large-scale relationships with existing brokers, he said, and these brokers are responsible for bringing them a lot of business. If these insurers are going to go big on direct, Richter detailed, then that puts them in competition with these brokers and the question is not just whether they can compete with that channel, but also whether they should.
“We’ve done a lot of research in the SME sector,” he said, “and we’ve spoken to quite a few owners of SME businesses, particularly in the context of insurance, to discern what their insurance buying process is, what their requirements are and what their key pain points are.”
One of the key findings from this primary research was that increased numbers of SME business owners are starting their insurance purchase research process online, Richter outlined. When they start this journey online, he said, they are trying to understand their needs and their requirements and, in most cases, they begin with the intention of completing this process on this online platform, particularly when it is the first time they are attempting such a purchase.
The information they need, however, is not easily accessible and customers are often not sure what they need and, when they try to complete the transaction, the customer experience is simply not very good.
“What our research tells us,” Richter said, “is that [customers] are effectively forced to go and speak to a broker because there is no better alternative, but the innate desire and demand is there for a more streamlined consumer experience, directly with the providers.”
SME businesses do not generally want to take hours out of their schedule to go and speak to a broker and become educated on the covers that they require, he said, and they want this experience to be more consumable. The biggest barrier that exists in the market at the moment, in terms of a more direct and more seamless process, Richter believes, seems to be the buying process and the way that it is currently structured.
Some of this demand has been driven by the online accessibility people have in other areas of their lives, Richter noted, as he looked to the makeup of SME businesses in the UK. A lot of these are single-person businesses which have been founded in the last several years and many people are self-employed in these micro-businesses which is driving a lot of growth in the SME sector. If you are an individual and a contractor, he said, it’s essentially the same thing and it stands to reason that you would expect a similar experience across all domains.
Many of the new propositions coming into the market are trying to address this now, Richter added. It’s a relatively new space and one that can be occupied by brokers or by carriers, as, from the perspective of an SME, they just want access, ease of use and a decent price.
“If a broker is able to meet those needs then so be it,” he said. “However, carriers are getting in on the game as well and they are starting to put a lot of investment into creating a more friendly customer experience in the SME sector. So, it’s a question of who gets it right first.”
