Almost Half of SMEs Will Buy Insurance Online Within 5 Years

A growing number of small businesses say they are looking to interact with their insurers online, with 36% saying they will buy online in the near term, and 48% within five years, according to PwC.

The findings are from a survey of 2,100 small businesses from 14 countries across North America, Latin America, Asia and Europe.

It shows the insurance market for small and medium sized enterprises (SMEs) is likely to completely change to match the digital transformation seen in personal insurance over the past decade. The insurance industry needs to act now to meet this growing demand from small businesses. The survey shows that small businesses in the UK are the most digitally savvy of their peers across the world when it comes to interacting with their insurance providers online. 43% say they have purchased insurance online, vs 24% on average globally.

Recently founded companies are more likely to interact with the insurance industry online. 48% of small companies under one year old, and 42% of those 4-5 years old, say they want to purchase business insurance online. This drops to 37% of more established companies aged over ten years, who tend to have deeper relationships with brokers and agents. Existing relationships with brokers/agents (44%) and the need for expert advice (38%) were the top reasons for not buying online.

Experience with buying personal insurance is the single biggest predictor of how a business wants to purchase its business insurance. 59% of those who bought their personal insurance online also purchased their most recent business insurance online. 70% of owners who purchased their personal insurance online state they would like to purchase their business insurance online in the future.

The findings also reveal that many small businesses are often unknowingly underinsured, leaving them vulnerable to paying out large sums in claims and legal costs if an incident occurs. For example, across the globe cyber cover for small business is extremely low, with just 16% of global firms telling PwC they currently have cyber insurance, despite an additional 46% acknowledging it could be applicable for their business. In addition, just under a fifth (18%) of global small businesses do not have liability insurance, and only half have indemnity insurance.