At a glance
- With SMEs eyeing expansion, brokers can capitalise by helping to identify new risks and ensuring existing cover is adequate
- Brokers set to continue to dominate the SME marketplace, as their advice is more important than ever
- Zurich remains focused on SME and is continuing to improve its SME offering
Small and medium enterprises are the engine of the UK economy – and as a sector, they are also absolutely core to many brokers as well.
And at long last, the economy is picking up with key indicators including falling unemployment, lower inflation and rising house prices. The International Monetary Fund has also recently upgraded the UK’s prospects for growth.
SMEs employ over 14 million workers in the UK and counting – around 60% of the private sector workforce – and these enterprises are well positioned to play a key part in the recovery.
Yet back in January 2013, Zurich research found that 16% of SMEs were so worried about the economy that they feared going out of business. A year later, the picture is a lot rosier and confidence is finally returning.
That said, SMEs will continue to face challenges, albeit the focus has now switched to other concerns, such as pressure on wages and difficulties in attracting and retaining talent. Beyond this, many firms still report it is hard to obtain funding.
Since this is such a huge market, it is not surprising that direct writers and aggregators want a share of the action. However, it does not appear that these providers have made the inroads they expected into the SME market
Richard Coleman, Director of SME at Zurich
“Now that the recovery does seem to be under way, we think this is set to be a better year for brokers’ SME accounts,” said Richard Coleman, Director of SME at Zurich. “And we all know, talking to your clients about their plans can help you, and us, identify any new risks and provides the chance to ensure existing cover is appropriate.
“Also, in a broader sense there is a resurgence of interest in smaller businesses from consumers, such as events like Small Business Saturday, which encouraged shoppers to think about independent retailers. And even the horsemeat scandal of 2013 encouraged some to think more about buying locally from a trusted supplier.
“SMEs may now be thinking about expansion whether organic or through acquisitions. This could include moving into new areas, exporting or recruiting. SMEs may want information on newer issues like cyber risks or perhaps employment matters such as liability issues when employing contract or home-based workers.”
This is all good news as an opportunity to demonstrate the value of advice in a world that is changing fast for SME clients. Customer trends, fast-moving technology, a variable paced recovery and demographic and skills shortages make it a complex risk environment for clients, who have many options where to seek their insurance cover.
“Since this is such a huge market, it is not surprising that direct writers and aggregators want a share of the action,” added Richard. “However, it does not appear that these providers have made the inroads they expected into the SME market.
“Certainly from Zurich’s perspective, we believe brokers will continue to dominate the SME marketplace. While some do buy direct, many more value advice in these uncertain times and although a firm may be small, it may well have complex needs.
“So, now is the time to make sure you are working with insurance partners that are committed to this sector and have invested in their product and service.”
A small business can be a demanding customer and more brokers are making sure they offer a more tailored approach and, in some cases, flexible hours. Being available to hold a business meeting via Skype for the time-poor client may well set one broker ahead of their rivals, even this means a different way of working.
Meanwhile, Zurich’s focus last year was ensuring that its SME service to brokers sharpened up.
“Feedback has been positive and we will continue to improve on our offering substantially further in 2014,” said Richard. “We are feeling positive about the year ahead – and the brokers we’re speaking to are sharing this view.”