Changing the way small businesses are perceived by insurers

For too long, small businesses have had to tolerate one size fits all insurance policies that they buy once a year and (hopefully) never have to use.  In turn, insurers will typically assess a small business based on a few actual metrics and a lot of assumptions.  Well, that’s changing.

Segments of one

Insurance companies have thousands of clients.  For the large corporate ones, they have detailed knowledge of them and stay very close: Insurance premiums are in the hundreds of thousands or millions.  But for the small or micro business who is paying £500 / year for their insurance, there is no way an insurer can economically know them intimately.  As a result, ‘segments’ are created.  Pubs & Restaurants, Small Fleets (aka ‘white-van-man’).  And I guess the numbers don’t lie:  These two segments aren’t attractive to most insurers.  Pubs run on tight margins and slips and trips can cause expensive claims. And we all know the stereo-type that is ‘white-van-man’. But not every pub or tradesperson with a van is a ‘bad risk’. 

Those days (and the stereo-types) have to go.  With the growth of data and analytics capability, let’s talk about segments of one, and recognition for businesses who are well run and lower risk than the average.

The vision

In an ideal world, every person and business would have their own ‘guardian angel’ sitting on their shoulder.  Looking out for them; keeping them safe.  Bad things would be avoided, and our ‘risk rating’ would be less.  In turn, insurance companies would lower our premium because we are less likely to make a claim.  To a degree, this is happening in Health Insurance:  Vitality will insure you, and if you share your health data with them from your Fitbit or Apple watch, you can earn rewards.

So, imagine a world where busy small businesses who don’t have departments looking after their supply chain, health & safety, people, finances and reputation can have a way to be on top of all these things.  The imminent storm that could flood a vehicle sitting in a flood risk area or the opportunity to save money by switching energy providers.  These risks and opportunities are flagged, and action taken to avoid a loss.  Insurers will be competing to have these businesses as their clients. 

Won’t insurers just increase my premiums just as fast as they reward me?

In short – no.  (Or those that do won’t win the best clients).  One of the UK’s largest insurers has a policy NOT to penalise customers who share their data with them.  The insurance premium they would have paid without disclosing their data (or the market price for their ‘risk’) is the most they will pay.  If they share data, improve their risk profile and avoid claims, they earn discounts.  Sure, if they double in size, premiums will rise, but that’s different.

But small businesses don’t ‘do’ risk management!

And here’s the rub.  The average small business just has ‘jobs to be done’.  The ones who survive and prosper are the ones who manage to put in the defences and fire-fight the problems when they flare up.  Often it’s about experience and intuition.  Mostly its just sheer hard work and long hours staying on top of everything.
Digital assistants to act as that ‘guardian angel’ are emerging.  Specialists for things like cashflow and cyber security, or ‘all in one’ solutions like Brisk.
Standing out from the crowd
When you apply for insurance, you typically fill out a form.  The insurer will then ‘enrich’ your answers with additional data: Your credit score and history, your website’s cyber security rating, your online reputation, the crime risk and flood risk for your location and more. This is the data that is available publicly about you.  Imagine if you cyber security rating for your website isn’t great, but you are meticulous in training your team to be aware of phishing attacks and the risks of data breaches.  You could actually be a better risk than the insurer thinks!
At Brisk, we believe that well run businesses who have nothing to hide should be able to show-off how good they are and get recognised with lower insurance premiums.  We do this by enabling you to evidence the measures you have in place to be a better risk, automatically.  No lengthy audits or form filling.  Brisk allows you to build your profile and choose what you share with your insurer to evidence the fact you are better than the average.
We are on a mission to modernise the way insurers view small businesses and moving the traditional insurance policy to a holistic approach to protecting businesses.  
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