Your marketing team has just handed you SMB buyer personas that they have created for your review and input. You think back to a similar exercise that the executive team did six or seven years ago and you dig it up just to compare. Here they are…side by side. How has the SMB buyer changed? How has the risk changed? How has the market changed? How have your commercial product offerings changed? Where does the new buyer fit in your planning? Where do you fit into theirs? These are the important questions that must be asked.
Right price.
First, you notice some similarities. SMB decision-makers are still value-driven. One of their priorities is shopping their business around. They are still concerned about getting a fair price. Then and now, SMB decision-makers take their time when researching options. They are no-nonsense. They don’t buy into marketing fluff. They want what is necessary. They evaluate based on real information. If they make an emotional decision, it’s because their analysis has triggered an emotion based on a current pain point or risk need.
Convenience and seeking recommendations were also key indicators of purchase patterns. Were the products easy to buy, easy to use, and was the claims process simple when it was needed? These traits are still in effect as well, but something has changed. SMB buyers want even more convenience and they need to feel that their insurer truly understands them — not just their industry — including the details behind their business risks. SMB decision-makers are growing more and more comfortable with sharing corporate/telematic/private data if it contributes to better prices, improved services, or greater protection. SMB buyers appreciate transparency in the relationship.
Right place.
When you look at the 2023 and the 2016 personas side by side, the glaring difference relates to business pressures. SMB decision-makers may have felt pressure in 2016, but it’s nothing like today’s concerns. SMBs are facing dozens of new challenges, including inflation, supply chain issues, rising interest rates, rising risk, and low unemployment. Today’s insurers can win the market by helping SMBs survive and thrive addressing these challenges, some the same and some new. But the real key to capturing a greater level of market share is making sure the offerings are placed where the SMB buyer is looking.
To help insurers where and how to meet the new SMB buyers as they navigate today’s compounding issues, Majesco published an SMB survey report entitled, Resiliency in Times of Change: Rethinking Insurance to Help SMBs Thrive. It covers SMB customer sentiment and SMB decision-maker demographics that identify options where to place new products and services, and how to position those products and services to optimize their impact. In today’s blog, we look specifically at Commercial Property and Business Owners Policies, as well as Workers Compensation insurance and Cyber insurance.
Commercial Property and BOP for SMBs
Today, we are seeing increasing environmental, societal, and technological risks that have the potential to intersect and significantly disrupt people’s lives. Increased extreme weather events and natural disasters have a growing unprecedented and increasingly significant impact. As a result, the cost of insurance is increasing, putting financial pressure on SMBs.
Some regions and properties are seeing significant increases due to claims from catastrophic events such as wildfires, hail, and flooding. Risk Management magazine reports that wind and flood losses were high prior to Hurricane Ian, and that event alone is expected to cost the industry more than $50 billion with some experts estimating it as high as $100 billion. Flood premiums could rise by 25% or more. At the same time, the replacement value of most properties has increased significantly due to inflation, which will drive higher replacement cost values and insurance costs.
What can help to lower Commercial Property and BOP premiums?
Personalized Pricing with Data
Gen Z and Millennial SMBs are highly interested (66% to 75%) in using data from several new, non-traditional sources if it results in more accurate, personalized prices for commercial property or BOP insurance (see Figure 1). In contrast, Gen X and Boomer SMBs’ interest is much lower with gaps of 22% to 48% as compared to the younger generation.
For both generations, the use of connected devices in a property is strong and offers an opportunity for insurers to develop new products that leverage such devices to not only help price but also monitor and reduce the risk for properties. Insurers offering products that provide monitoring and personalized pricing could help SMBs reduce risk and, potentially, insurance premiums, which addresses the financial top-of-mind issue.