SME insurance is becoming increasingly popular with entrepreneurs of all stripes. SME stands for Small Medium Enterprise and is the term used to describe a company which is able to operate as a sole proprietor or a partnership. The typical characteristics of an SME are that it has fewer employees than a traditional corporation, and that it has revenues which are substantially lower than those of its larger competitors. Because of these characteristics, many entrepreneurs are attracted to the SME market because it can be a cheaper way of starting an enterprise. While this is true in some ways, there are still several downsides to SME insurance.
In the early days of SME insurance, the industry was dominated by “insurance brokering firms”. These firms would often act as agents for larger insurance companies and would take their cut from the premiums that the insurance companies would pay them for carrying out the services they requested. With the advent of broker networks, however, this has changed. Nowadays, SME insurance brokers work under a system whereby the larger firms advertise for business from smaller ones, and the smaller ones to respond by advertising themselves. As such, there is a much lower barrier for a broker to earn a client’s trust and therefore entice them to partake in the services that they have requested.
However, it is not just the large SME firms that now offer SME insurance brokerage services. Smaller firms, who may not have the means of investing in a building of their own, rely on SME brokers to help them find clients who are willing to invest in a property for which they may not necessarily be the main owner. This can be a risky business, however. Since SME brokers do not hold the same loyalty and regard for their clients which traditional insurance brokers do, they can sometimes take advantage of the clients by pretending to be interested in them only in order to get themselves a commission.
To combat this, the SME insurance broker must constantly be on his guard against these types of shady brokers. A good broker will always treat each potential client as an individual, taking interest in what they have to say about themselves, their experience, and their requirements. He will ask probing questions which will allow him to obtain vital information about his potential clients in order to provide the best service possible. The smaller companies that rely solely on word of mouth advertising, however, are much less careful with whom they advertise their services. Consequently, they are often exposed to a greater number of unscrupulous brokers who know that there is money to be made by dealing with clients who need quick cash and are willing to spend it on any unsuspecting person that walks in their way.
In recent years, SME insurance brokers have also started taking on global clients, who may not even reside within the UK. Since most SME’s have a much larger market in other countries, they are able to cater to these customers who need their help in finding a suitable business owner for their company. In the past, this would have been near impossible for smaller businesses without the resources to deal with such clients on a global scale.
As the UK economy as a whole continues to improve, more people will have access to SME insurance. This will mean that the competition among SME brokers is likely to increase. This means that prices will drop for SME’s looking to reduce their overhead and boost profits. However, as with everything else, customers need to be careful where they shop. A reputable broker will always be able to find the right deal for their clients and there’s no reason why smaller businesses shouldn’t be able to get in on the action as well.