At a glance
- SME risk landscape changing
- New study reveals SMEs now have greater appreciation of risk
- Zurich increasing SME trading through brokers
Written by the Economist Intelligence Unit exclusively for Zurich’s brokers
The SME landscape is changing, and for the better. Attitudes to risk have altered during the course of the financial crisis and SMEs are now becoming more resilient by building up much lower levels of debt. Diversification is on the increase and SMEs are now also thinking about more flexible ways of working.
That is the gist of a new report by the Economist Intelligence Unit, commissioned by Zurich, which highlights the changing risk landscape for SMEs in the UK. The findings of the research have examined the risk, technology and demographic shifts to which SMEs need to adapt in order to survive and succeed in this new economic landscape.
From EIU report: An expanding network of risk and opportunity: How UK SMEs are under-estimating the growing complexity of technology
“SMEs are now better businesses, but different; that is really important to understand,” said Richard Coleman, Director of SME at Zurich.
“As the crisis has carried on, SMEs have gained a much greater appreciation of risk, something like 53% of customers are spending more time assessing risk and thinking strategically about their business than they were two years ago.
“What that means for brokers is that there has never been a greater appreciation for the need for advice. We are always talking about clients wanting to go direct and wanting insurance cheaper, but SMEs really appreciate more risk advice than they ever have done.”
Zurich has increased its focus on SME trading and is only going to market through brokers.
“SME is becoming more complex and not less,” said Richard. “Customer behaviour means that there will still be a place for brokers.”
There is talk within the industry that the SME sector, and more specifically ‘micro’ SMEs, may one day follow the path of personal lines and take a more direct approach to fulfilling their insurance needs.
“I don’t see it happening,” said Richard. “But if it is happening, it is happening slowly. You look at some of the big direct writers, they have been operating for seven to eight years and haven’t broken £100 million yet. And we talk about a £5 billion market.
“So it is definitely a threat, but Zurich has made a strategic decision to go to market only through brokers as we think customers still want to buy this way as there is a big difference between insuring your car and insuring your livelihood.”
Richard added: “As an SME, you want to look someone in the eye or at least have a conversation or at least have the reassurance that a broker has selected the right policy for you.”
Zurich remains a mid-market player and part of its strategy is to achieve the same penetration in SME markets, and the insurer has an appetite to grow its SME book.
There is a big difference between insuring your car and insuring your livelihood
Richard Coleman, Director of SME, Zurich
Over the past two years, Zurich has concentrated on the basics and significantly invested in its underwriting community, adding over 25 underwriters. All of Zurich’s SME underwriters are empowered to trade and make judgements to win and retain profitable business.
Zurich’s aim is to make first response on new business combined quotes in four hours, with only a handful of renewals issued less than 28 days prior to renewal and a handful of mid-term adjustments older than seven days.
The insurer has doubled its transactional new business in a year across all lines of business and Zurich now writes over £2 million transactional new business a month.
With an increasing SME appetite and improved service, especially in person-to-person trading, Zurich has a near 100% renewal record for its scheme and portfolio transfer relationships. It currently writes around £20 million annualised new gross written premium from schemes, in addition to Zurich’s existing successful scheme partnerships.
If Zurich isn’t already one of your key SME markets, and you’d like it to be, then please call Richard Coleman or Jason Wilson, Head of SME Development. Alternatively, speak with your Zurich Account Executive.