The cost of insurance premiums was ranked as the top deciding factor when picking a policy by 61 percent of small and medium-sized enterprises (SMEs), according to survey data released by London-based RSA Insurance.
This was followed closely by brokers’ customer service and understanding* of their clients’ businesses, which was ranked in second place by 58 percent of respondents as being in their top three influencers, according to RSA.
“This highlights the crucial role brokers play in the process as well as the need for insurers and brokers to strike a balance between price and service,” said RSA in its commentary about its analysis of business owners’ buying decisions.
The survey also found that only 38 percent of SME owners ranked the scope of cover as one of their top three influencers, despite its importance when a claim occurs. (The survey formed the basis of an RSA report published late last year, titled “Future Impacts: the changing nature of risk facing small businesses in the UK.” The latest analysis of buying decisions was not included in the original report.)
“It is worrying to see that such a small proportion of SMEs rank the scope of cover as a top three factor,” said Russell White, Schemes and Deals director, Regions and SME, Commercial Risk Solutions at RSA.
“This is undoubtedly contributing to the underinsurance problem we see among SMEs, and it is crucial that brokers highlight its importance to their clients to ensure they are sufficiently protected,” White added.
“Brokers’ understanding of their clients’ businesses and the quality of their service are the only factors that come anywhere close to the influence the cost of premiums has when it comes to taking out insurance,” he said. “This highlights the great importance of brokers and their role in developing a sound understanding of their clients’ businesses and insurance needs.”
Top factors which influence SME owners’ decisions when buying insurance:
When questioning brokers on which policies are most sought after by SMEs, the most popular three (excluding employers’ liability insurance) were:
Cyber insurance is one of the least sought after policies, with only 6 percent of brokers identifying it as one of the top three insurance products their SME clients want, the survey found.
The analysis of what influences small business owners’ buying decisions was developed as a result of survey conducted in September 2016 by Opinium of 1,000 senior decision makers at UK SMEs. Insurance broker fieldwork was collected and analyzed by Cicero Research, with 84 broker respondents. The original survey report, which was written and produced by Cicero Group, was titled “Future Impacts: the changing nature of risk facing small businesses in the UK,” and was published in November 2016.
* Customer service and understanding of the business were initially two separate responses, ranked as top three influencers by 25 percent and 33 percent of SMEs, respectively. RSA said they were later combined due to the similarity of the two options, their closely related meanings and their relevance to brokers.
Source: RSA