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Business Management Review | Monday, March 27, 2023
Small businesses prefer a more comprehensive array of coverage, service, and distribution options.
FREMONT, CA: There has been a paradigm shift in the US small business insurance market with the emergence of insurtechs and other alternative providers and heightened buyer awareness driven by coverage gaps. A legacy insurer offering commoditized policies primarily sold on price through traditional agents and brokers should rethink its business model and value proposition. At the same time, a company that has already begun transforming might want to accelerate it further.
Insurance companies can grow their overall business and market share by creating more customized, adjustable coverage and enhanced advisory services marketed through various channels to take advantage of enhanced attention and trust among small-business buyers.
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New and enhanced products: Researchers found that many small businesses were concerned about their coverage, emerging exposures they needed to deal with, and the need for policy flexibility related to their insurance. Carriers and their intermediaries must take advantage of this opportunity to upsell existing customers by increasing coverage levels for those concerned about being underinsured. Small businesses often operate on tight budgets, so they may be driven to select the most basic coverage they can find. This is why carriers and intermediaries need to build trust with their customers and provide them with the coverage they need. This can be done by offering more flexible policies and coverage options that meet their specific needs and educating them about the importance of adequate insurance coverage. The insurers may grow the overall pie even more if they market additional coverage for emerging risks to one-third of respondents willing to buy more coverage.
Shifting customer needs: Many small businesses have become acutely aware of possible gaps in their insurance portfolios due to global events. A consumer survey indicates that filling the gaps by simply selling them more coverage is unlikely to boost long-term growth or sustain short-term retention. A growing number of small businesses are also looking for more comprehensive and diverse solutions than what commoditized risk-transfer policies have traditionally offered. In addition to greater coverage and pricing flexibility, the survey found that significant segments also want additional risk management services and new insurance sources.
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