Gone are the days of working with brokers to get business insurance.
For a younger generation of business owners and managers in particular, the need to research, source and manage insurance products online is critical. In recent years, a community of InsurTechs has developed a digital-first approach to what was a problem in the past, very paper-intensive industry.
However, an insurance company needs to do more than just offer policies to businesses online to meet a variety of more demanding needs of small and medium-sized businesses (SMBs). In order to act as a real InsurTech, the players in the industry will face difficult market problems and opportunities to modernize the business with SME insurance.
B2Z Insurance founder and CEO Kuldeep Malik examined how a challenging business environment tests the resilience of not only SMEs but insurers as well. And as the industry shifts like the proliferation of real-time payments in the insurance market, the industry will continue to see new risks and benefits to adopting digitization.
In one of the most volatile times for SMB owners, getting insurance may never have been more challenging, yet so important.
On the one hand, the month-long shift in regulatory mandates related to how mom and pop shops and restaurants work has made it increasingly difficult to assess which insurance policies are the best fit. Vacation days and new hires, as well as the shift in business models from in-store to online business, mean that sourcing an employee compensation policy or a business owner policy that covers physical store fronts can go wrong if coverage changes.
At the same time, insurance coverage can mean the difference between surviving and going down in such a tough market.
“The small business owner has a really hard time planning too much,” said Malik. “Let’s say you are a restaurant. You don’t know when you have 50 percent capacity or just take away. “
As a result, companies struggle to budget for marketing, hiring, inventory, and other investments. However, if a customer slips and falls, or if there is a cyberattack, these companies can lose tens of thousands of dollars.
“When you take all of these things into account, it becomes harder for any small business that isn’t insured to survive through these types of claims,” added Malik.
However, as he noted, today’s entrepreneur is unwilling to call a broker and wait a week for someone to present their insurance policy options. These professionals need to take out insurance for their business just as they would in their private life – or buy something as a consumer. This means an online first approach that can assess a company’s needs and present a range of products to the company in a consolidated manner.
The research, underwriting, purchase and management of SME insurance can be completely digitized. Therefore, all payments associated with this policy management must also be made electronically. Supporting online payment acceptance by insurers is now a must for their SMB customers, but the digitization of payments in the SMB InsurTech arena doesn’t end there.
Malik highlighted the importance of optimizing insurance payouts for SMEs, especially at a time when access to capital is critical to surviving an event like a cyber attack or natural disaster.
“Cash flow is the big thing that companies need to manage,” he said. “Insurance company payment transactions have typically been made by check, which will delay your payment by a week or two before you can receive that check.”
Expedited direct bank transfers are invaluable to an SMB owner who has a $ 50,000 bill for damage or other costs related to an insurance claim. Malik said the emergence of real-time payments is a promising development for the insurance space that will enable providers to provide instant payouts to policyholders.
While this creates added value for customers, it can also expose freight forwarders to new risks. In particular, the rise in real-time payments has raised concerns about the ability to fight fraud when the window of opportunity to identify malicious activity and recover funds is so small.
The FBI estimates that insurance fraud costs more than $ 40 billion each year, excluding cases of health insurance fraud, resulting in higher premiums for policyholders. When withdrawals are instant, it can be challenging to make up for fraud losses.
Even so, Malik said, electronic payments, even in real time, remain far better and more secure than check payments, which have been used by the industry for decades.
“Digital is the best way to go when it comes to payments,” he said. “It’s completely understandable – that’s the crucial part of it … Everyone is trying to go digital fast, and small business owners are doing exactly the same thing.”
NEW PYMNTS DATA: CRYPTOCURRENCY PAYMENTS STUDY – MAY 2021
About the study: U.S. consumers see cryptocurrency as more than just a store of value: 46 million plan to use it to make payments for everything from financial services to groceries. In the Cryptocurrency Payments Report, PYMNTS surveyed 8,008 US cryptocurrency users and non-users to investigate how they would like to use Crypto for purchases, which Crypto they would like to use – and how merchant acceptance can affect merchant choice and consumer spending .