Small and medium-sized enterprises (SMEs) are a key driver of any economy. In Spain, they represent 99.8% of the business fabric and generate 66.7% of employment, while in the UK, SMEs represent 99.9% of the business fabric and 61% of total employment. Therefore, it is essential that these companies have the right products and services to protect their businesses.

In this sense, insurance plays a fundamental role. There are different types of insurance for SMEs in the sector, but in many cases, these do not adapt to the needs and risks of these companies. This is mainly because insurers do not always have enough information about their SME customers to personalize their products correctly.

SMEs are very heterogeneous companies, with different sizes, sectors of activity and needs, and they are constantly adapting to changes in the market. Therefore, it is important that the insurance industry develops products and services tailored to the specific characteristics of each company.

Lack of insurance tailored to the needs of SMEs can have negative consequences for both parties. On the one hand, SMEs may be exposed to risks that are not covered by their insurance. On the other hand, insurers may experience premium leakage and a higher exposure to possible claims.

That is why, today we talk about why insurers should pay attention to this sector:

• SMEs are a very large potential market: In Spain, there are more than 3 million SMEs, and they represent 62% of the Spanish GDP, which represents a huge potential for insurers. In the OECD, they represent 99% of all private sector companies and in the UK, they account for 52% of total turnover.

• SMEs are a growing and constantly changing market: SMEs are growing in Spain, which means that the market for SME insurance is also growing. The majority of British SMEs (79%) adapted their business during the pandemic, and 75% anticipate a positive future for their organization if they continue to make changes to adapt.

• SMEs are a profitable market: SMEs represent up to 30% of profits in insurers that offer products for these companies. They are key potential customers for the economic balance of the insurance sector, and they are also very likely to purchase complementary products and services.

• Dissatisfied customers are a sales opportunity: 90% of dissatisfied customers do not complain, they simply leave. According to McKinsey, only a third of SMEs in Germany stated that they were completely satisfied with their current insurance coverage. Therefore, there is a real opportunity to enter the SME market for innovative insurers that have a customer-centric approach.

• Digitalization offers new opportunities: Recent developments in digitization offer new opportunities for insurers to adapt their products and services to the needs of SMEs, which, on the other hand, are increasingly digital. Insurers can now use technology to collect information about their customers and personalize their insurance more effectively.