For decades, SMEs have faced a financial gap from banks and insurers alike, limiting their ability to face risks and grow. How can insurers better serve SMEs’ needs, and gain market share at the same time?

Last year, the FCA identified 4,000 “predominantly small and medium sized” firms – the largest commercial segment in the UK – as having low levels of financial resilience and being at a heightened risk of failure following COVID-19 shocks.

Even ahead of the pandemic, SMEs’ need for external finance – to stay alive or fund expansion plans – was estimated at €400 billion ($481 billion) in 2019 in Europe alone, where SMEs account for 65% of the private-sector employment (or about 100 million workers before the pandemic outbreak).

When such big crisis hits, SMEs – whose cash is their lifeblood – face a major threat to their own viability. This is the reality-check or the playground where insurance companies have kicked off digital initiatives to grab new market share or, most of times, to reduce customer churn (an Accenture report released in 2015 showed that customer disloyalty was costing insurance companies $470bn across personal lines, life and P&C, and only 29% of customers were happy with their current insurance provider).

“Trust and transparency are more important than ever due to financial challenges that have emerged during the pandemic”, according to McKinsey, who ran a survey to track recent SME market trends.

Can such a vulnerable segment of customers turn into a profitable one? How?

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