Insurance: pricing matters more for businesses than retail clients

Self-employed and small companies up to 10 people behave very much like retail customers for their insurance, but are more price sensitive.

In brief:

• EY’s 2023 Insurance Barometer surveyed self-employed and small companies up to 10 people and compared results with the 2021 insights on retail clients.
• Self-employed and small companies are highly comparable to retail clients with similar usages and preferences for insurance.
• This group is highly sensitive to pricing and prefers to have physical conversations with their intermediaries or insurers.

After looking at retail clients in 2021, in 2023 EY’s Insurance Barometer focuses on businesses: self-employed and companies up to 250 employees. The aim is to gain insights into their preferences and their intent when purchasing insurance.

This article delves into the findings specifically related to self-employed and companies up to 10 employees. The findings pertaining to companies with more than 10 employees can be found here and perspectives on sustainability matters are available here.
 

Pricing as the most important selection criterion when choosing an insurance provider

EY’s 2023 Insurance Barometer collected insights about the primary criteria considered when selecting commercial coverage, spanning areas such as car and fire insurance.

Pricing is by far the most important consideration, with almost 45% of self-employed respondents, and nearly 50% of small companies citing it as crucial. A second important factor for both groups is the availability of various contact channels, such as phone, e-mail, website, in-person discussions, etc. Furthermore, the fast pay-out of claims and innovative offerings are also considered as important for both groups. The provision of sustainable insurance is not at all important for companies with up to 10 employees (2%). 

In the 2021 Insurance Barometer which focused on the preferences and intent of retail clients regarding insurance, pricing did not emerge as an important attribute of a good insurer.

Physical conversations remain the preferred communication channel

In our survey, we asked respondents about their recent interaction channels as well as their preferred channels for engaging with insurance-related information.

Both self-employed and small companies widely use in-person conversations (54%) to access information about insurance. The other traditional communication channels come in second and third: e-mail (37%) and phone (34%).

Regarding their preferred communication channels, in-person conversations ranked first for both self-employed (56%) and small companies (57%). This is very similar to the trend observed with retail clients. However, while for retail clients websites or mobile applications (31%) scored high as second preferred channel, for self-employed and businesses up to 10 employees, e-mail (21%) and phone (8%) remain  second and third preferred channels followed closely by website or mobile application with around 7,5%.

A multi-channel strategy is thus important for both retail and small business clients. However small business clients tend to prefer sticking to the traditional communication channels. It is therefore likely that a personal service at the client’s best convenience (through in-person conversations, phone calls or e-mails) remains key for small business clients with up to 10 employees.
 

The willingness to buy insurance online is comparable to what we observed for retail clients

The willingness of self-employed and companies with up to 10 employees to definitely or probably underwrite an insurance fully online is around 33%, which is consistent with retail clients (around 33% also). The primary driving factor for buying insurance online is lower pricing (42%), followed by extensive risk coverage, the simplicity of the insurance product and 24/7 accessibility.

In the previous Insurance Barometer for retail clients, pricing did not rank among the top 3 factors. Instead, effective claims follow-up, the availability of comprehensive risk coverage, and the simplicity of the insurance product were considered the most important. This confirms that self-employed and business owners with up to 10 employees are more price-sensitive for their commercial (non-life) insurance, compared to retail clients.

Deductions and lower costs are the most preferred advantages for insurance packages

In the Belgian market, it is a common practice to bundle Non-Life products into packages, which can be either generic or sector-specific (e.g. a package tailored for restaurant owners or physiotherapists). In return for consolidating these coverage options, clients receive various advantages such as free fractioning of premium, premium reductions or bonuses, additional covers, etc.

This price sensitivity of self-employed and small business owners with up to 10 employees is also confirmed when looking at insurance packages. Around 42% stated that their insurance products are consolidated within a package, of which almost 50% is specific to their respective sector. In order of preference, the advantages expected from these packages are the following:

1. deduction on the premium,
2. lower (administration) costs, and
3. the possibility to have a comprehensive overview of all their contracts, both private and professional.