UK SME Insurance 2012

Transcription

1 UK SME Insurance 2012 Growth in directly purchased SME insurance is placing pressure on brokers Use this report to: Target prospects emerging from shifts in the shape of the SME market and changes in product penetration rates. Inform your distribution strategy with an understanding of SME purchasing behavior and preferences. Develop strategies for attacking opportunities arising from the key concerns and needs of.

2 ABOUT THIS REPORT The incredibly competitive SME market is still evolving as insurers master fast-flow distribution strategies for commercial products. Considered positioning of SME propositions are vital when difficult current economic conditions and a mature market mean insurer ambitions to achieve marked growth will likely come at the cost of rivals'. This report analyzes the SME market to highlight key opportunities for growth, provides insight into the SME insurance purchasing journey, and provides an overview of the competitive dynamics currently in play in this space. YOUR QUESTIONS ANSWERED What insurance opportunities are emerging from the concerns of or growth in particular trade sectors? Which insurers are favored by in the purchase of, for example, public liability or directors and officers cover? How do approach the purchase of insurance and where in this journey can be won? KEY FINDINGS AND HIGHLIGHTS Director s and officers liability insurance saw a marked increase in purchase rates between 2011 and 2012 according to Datamonitor research, as insurers and brokers push penetration. A majority of continue to purchase insurance through a broker (50.5%); however, es are increasingly turning to direct channels (35.1%). Aviva remained most popular with brokers placing packaged SME in 2012, favored by 17.2% of respondents, while surveyed selected AXA as the overall provider of choice. Want to know more on our methodology or receive an exclusive preview of the report? Contact us today and we will be happy to answer all your questions: enquiries@datamonitor.com

3 Table of contents OVERVIEW Catalyst Summary EXECUTIVE SUMMARY The number of enterprises at the start of 2012 grew by 5.6% 99.9% of UK es are, representing 48.8% of total turnover 19% of lie within the construction industry Administrative and support services grew its share of SME es by 1% in 2012 The SME insurance market was estimated at 5.4bn GWP in 2011 The economic recovery promises only a sluggish market for commercial insurers before 2016 The SME market accounts for 35.8% of commercial insurance gross written premium The SME insurance market's GWP is forecast to reach over 6.5bn in 2016 Many lack adequate continuity cover The key SME fears demonstrate a strong opportunity for expansion of cyber liability insurance Purchasing insurance via direct channels is growing in popularity often start the purchasing process online with research Only 22% of purchase insurance online Brokers continue to be the most used channel but this is under threat from direct routes Over half of micro-enterprises expecting to change purchase channel will be turning to aggregators Legal advice is the most common additional service held and is still in high demand Nearly one third of have access to legal advice and a further 12% want it The importance attached to receiving ongoing advice from a provider increases with size Brokers name Aviva the leading insurer for SME 17.2% of brokers place most packaged SME with Aviva AXA toppled Aviva as the most selected provider by THE MARKET DEFINED The number of enterprises at the start of 2012 grew by 5.6% 99.9% of UK es are, representing 48.8% of total turnover Micro-enterprises have been the predominant growth sector driving the number of UK es Company registrations continue to grow while liquidations saw a decline from Q New company registrations have grown year-on-year since Company liquidations slowed from Q but es continue to face uncertainty Construction remains the largest SME market industry 19% of lie within the construction industry Administrative and support services grew its share of SME es by 1% in 2012 THE SME INSURANCE MARKET AND OPPORTUNITIES The SME insurance market was estimated at 5.4bn GWP in 2011 The economic recovery promises only a sluggish market for commercial insurers before 2016 The SME market accounts for 35.8% of commercial insurance gross written premium Brokers expect SME insurance rates to rise modestly in 2013 The SME insurance market's GWP is forecast to reach over 6.5bn in 2016 Liability insurance is the most commonly purchased insurance by SME insurance needs vary depending on size and complexity of trade risk Liability insurance, as compulsory cover for employees, is held by 72% of within manufacturing and construction sectors are most likely to purchase public liability insurance Many lack adequate continuity cover Opportunities arise from shifts in SME concerns and purchasing behavior Purchase of SME insurance from the direct channel is increasing in popularity The key SME fears demonstrate a strong opportunity for expansion of cyber liability insurance Underinsurance is not a major concern for, limiting insurers' ability to highlight this issue THE SME PURCHASING JOURNEY often start the purchasing process online with research Using online resources to identify appropriate insurance is the most common first step taken by Providers were found largely through previous contact or online still prefer to use the phone over online routes Only 22% of purchase insurance online Purchasing insurance via direct channels is growing in popularity Brokers continue to be the most used channel but this is under threat from direct routes Over half of micro-enterprises expecting to change purchase channel will be turning to aggregators

4 Price is the key motivation for the change in channel use by are not swayed in the selection of provider by price alone Price was a key factor in the selection of provider for 60% of, but cover quality was also important Directors' and officers' liability and van insurance saw the greatest levels of SME switching 36.5% of with directors' and officers' liability cover changed provider at last renewal The share of intending to switch provider at next renewal increased in 2012 SERVICES AND RELATIONSHIPS Legal advice is the most common additional service held and is still in high demand Nearly one third of have access to legal advice and a further 12% want it Less than one quarter of pay for additional services One quarter of small firms consider ongoing advice from a provider to be very important The importance attached to receiving ongoing advice from a provider increases with size Half of small and medium-sized firms fully appreciate the value of brokers for advice 67.5% of consider brokers to be valued advisors The level of contact with a broker quickly increases with size DISTRIBUTION CHANNELS Brokers face a balancing act between efficiency and providing a human touch Brokers have had to evolve to cater for lower margin Brokered SME is increasingly e-traded, with insurer differentiation lying in agile referral handling Smaller brokers may be able to find a gap in the market, with greater focus on service and personal contact While many turn to brokers to deliver the best policy price, many other factors feature Directly purchased SME insurance is a growth channel for insurers The direct channel focuses on well-signposted packages for trades Comparison sites are increasing their share of microenterprise Commercial insurance on aggregators is limited in scope to the smallest SME Banks are an underutilized distribution channel with potential for growth The currently low usage of banks among may change if focus and investment is made A range of SME purchasing preferences encourages a multi-channel approach Broker services remain vital for many SME needs but direct purchase options are also in demand COMPETITOR DYNAMICS Brokers name Aviva the leading insurer for SME 17.2% of brokers place most packaged SME with Aviva Direct Line for Business dominates the insurance market's advertising spend Direct Line for Business accounted for 78% of insurance advertising in H AXA toppled Aviva as the most selected provider by A dip of 5.3 percentage points in SME selection saw Aviva drop to second place in the market in 2012 Aviva's SME book has contracted in 2012 but its Fast Trade intranet platform is most popular with brokers AXA launched its Simple e-traded product range and a direct channel offering in 2012 Zurich has focused on attracting small brokers Allianz's distribution strategy includes its QuoteSME e-trading platform and a direct online brand Hiscox launched a new e-risks product in 2012 RSA narrowed its broker relationships to focus resources on core relationships APPENDIX Top five insurers by line Employer's liability insurance Property insurance Professional indemnity insurance Public liability insurance Personal accident and travel insurance Directors' and officers' liability insurance Business interruption insurance Commercial fleet insurance Key man insurance Definitions Banks/building societies Brokers Direct Price comparison websites Utilities/retailers/affinity groups Earned premiums Gross premium Written premiums Small and medium-sized enterprise (SME) Sources Methodology Datamonitor's 2012 SME Insurance Survey Datamonitor's 2012 Commercial Insurance Broker Survey Further reading Ask the analyst Disclaimer

5 TABLES Table 1: Profile of UK enterprises by volume, employee numbers, and turnover, 2012 Table 2: Number of new enterprises registered at Companies House, April 2007 to March 2012 Table 3: England and Wales company insolvencies, 2006 Q Table 4: Table 5: ( 000s), 2012 UK by industry sector split Total SME market GWP, by segment Table 6: UK SME insurance forecast GWP ( 000s) and growth rate (%), 2011e 16f Table 7: SME key concerns, 2012 Table 8: SME insurance purchasing method, by size of Table 9: purchase Channel used by SME for insurance Table 10: Intention to switch purchasing channel by, by size of, Table 11: Intended new channel by expecting to change purchasing route, by size Table 12: Key motivations for purchasing channel change by, by size Table 13: Rate of switching insurance provider at previous policy renewal by Table 14: Key reasons for use of a broker among by size (multiple answers allowed) Table 15: Commercial insurance products listed on the four main price comparison sites Table 16: Business insurance advertising expenditure by the 10 highest spending brands, 2009 H FIGURES Figure 1: Large companies account for only 0.1% of registered private enterprises Figure 2: The SME insurance market's GWP is forecast to reach over 6.5bn in 2016 Figure 3: Less than a quarter of SME respondents hold BI insurance Figure 4: Damage to reputation and the risk of data loss are the primary SME fears Figure 5: follow two popular routes ahead of purchase: either calling a provider or researching online Figure 6: intending to switch channel are largely attracted to comparison sites Figure 7: 62.0% of consider ongoing provider advice to be very or fairly important Figure 8: Aviva was the most popular insurer among brokers for packaged SME products Figure 9: AXA replaced Aviva as the most selected provider by surveyed in 2012 Figure 10: The market defined: key points Figure 11: The number of UK enterprises saw its strongest growth in 2012 since the flat-line of 2008 Figure 12: Large companies account for only 0.1% of registered private enterprises Figure 13: Only the number of micro-enterprises has seen year-on-year growth since 2009 Figure 14: The growth in new company registrations in 2011/12 suggests that the economy is recovering Figure 15: After an increase in insolvencies in 2011, the second half of 2012 saw a marked improvement Figure 16: Key points: the SME insurance market and opportunities Figure 17: Brokers predict small rate increases in SME insurance over the next 12 months Figure 18: The SME insurance market's GWP is forecast to reach over 6.5bn in 2016 Figure 19: Liability insurance is the most commonly bought cover by, followed by property Figure 20: within the manufacturing industry are the best target for public liability insurance Figure 21: Less than a quarter of SME respondents hold BI insurance Figure 22: Many depend on key individuals but lack cover for the possibility of their being incapacitated Figure 23: Growth in the direct channel in 2012 has been to the detriment of brokers Figure 24: Damage to reputation and the risk of data loss are the primary SME fears Figure 25: journey Key points: the SME purchasing Figure 26: follow two popular routes ahead of purchase: either calling a provider or researching online Figure 27: Previous contact and exposure to providers online are the key factors alerting to providers Figure 28: Just under half of all arrange insurance by phone Figure 29: For micro-enterprises, the split between direct and broker channels is balancing out Figure 30: intending to switch channel are largely attracted to comparison sites Figure 31: Nearly three quarters of intending to switch purchasing channel are hoping to secure a better price Figure 32: A majority of consider both price and level of cover ahead of provider selection Figure 33: Van and commercial vehicle

6 insurance account for low SME retention levels Figure 34: The proportion of small es expecting to switch provider increased by 10% in 2012 Figure 35: Legal advice is the most commonly held additional service offered with insurance products Figure 36: Less than one quarter of already pay for additional services Figure 37: 62.0% of consider ongoing provider advice to be very or fairly important Figure 38: None of the medium-sized firms surveyed described broker contact as non-existent or limited Figure 39: A majority of micro-es will only have contact with brokers at renewal Figure 40: One third of brokers are still not using insurer extranets for any placement Figure 41: Advice through complex insurance cover was a common driver for broker usage by larger Figure 42: Key points: competitor dynamics Figure 43: Aviva was the most popular insurer among brokers for packaged SME products Figure 44: Aviva and AXA account for one third of broker non-packaged SME placement Figure 45: AXA replaced Aviva as the most selected provider by surveyed in 2012 Figure 46: Aviva's Fast Trade e-trading platform offers a broad range of SME insurance products Figure 47: AXA's direct insurance site provides an interactive wizard tool to identify SME needs Figure 48: AXA and Allianz made notable improvements to their positions in the employers' liability market Figure 49: Aviva's share of SME selection in property insurance declined by six percentage points in 2012 Figure 50: Hiscox remains the number one SME provider for professional indemnity insurance Figure 51: Market share between the top five public liability insurers is comparatively balanced Figure 52: Aviva's dominance of the accident and travel insurance market in 2011 has diminished Figure 53: No one insurer has emerged as a clear market leader for directors' and officers' liability insurance Figure 54: AXA emerged in a strong position within the interruption insurance market in 2012 Figure 55: AXA and Aviva lead the market in commercial fleet insurance Figure 56: Aviva remains the insurer of choice for key man insurance