The survey, which included 300 firms from the UK, also showed that small businesses in the UK are more digitally savvy than their peers across the world when it comes to interacting with their insurance providers online, with almost half (46%) saying they have purchased insurance online (vs 24% worldwide).
Of those looking to switch insurance providers in the next five years, over two thirds (68%) of UK firms employing less than 50 people say they would look to buy their next insurance policy online. Over a third also say they would be willing to use sensor technologies in their businesses if it would bring down their insurance premiums.
Jim Bichard, UK insurance leader at PwC, commented: “The UK insurance market has always been seen as one of the most mature, but our survey shows we can also be the most innovative. Taking a lead from the digital transformation seen in personal lines, UK insurers are now leading the way on how they interact online with small businesses. Despite some progress, our research shows this is just the tip of the iceberg and there is still so much more to play for in closing this insurance gap. Using technology; insurers can also reinforce the value they bring through providing greater coverage for current & emerging risks.
“In order to make the most of this growth opportunity, insurers need to focus on understanding the varied and complicated ways the UK’s small businesses function, as well as investing in ways to deliver a full range of products that will meet their needs.”
Other key findings
Recently-founded companies are more likely to interact with the insurance industry online. In the UK, 60% of small companies under five years old say they want to purchase business insurance online - this drops to 44% of more established companies aged over ten years, who tend to have deeper relationships with brokers and agents. This highlights the small window of opportunity for insurers to directly engage and build relationships with small businesses.
Insurance purchasing behaviour within small businesses is strongly driven by the existing buying habits of their founders, meaning where personal insurance goes, business insurance will follow. Of the UK survey respondents who buy their personal insurance online, 64% say they would prefer to buy their business insurance online too.
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 12% of small UK firms and 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, an only half have indemnity insurance.
Steven Gough, insurance director at PwC, added: “By their very nature small businesses with single owners or managers reflect the behaviours of their founders. As in their personal life, time-starved owners turn to digital channels to find the right insurance cover for their new venture. Insurers need to be ready to meet these customers with the right products and solutions and be able to offer online advice and guidance to help them make the right decisions around the protection they need to protect them now and in the future.
“Insurers must have the capabilities to understand their customers and have technical solutions allowing them to rapidly evolve and adapt solutions as the market changes. Insurers must also look to startups not just as customers but as potential partners in providing new technology solutions and value-added services. By doing so, insurers will be well placed to interact with new small business customers on an ongoing basis - not just at renewal ”
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