Simply Business

Scott Sporn

Insurance Product Innovation Leader

For centuries, the insurance industry has depended on data to assess risk, set premiums and develop products. But as the small business landscape of the 21st century evolves, data is taking on another important role, helping us better understand the people and businesses we're trying to protect.

One of the most valuable lessons I've learned is that today’s small business owners are far from a homogeneous group. Their businesses, profiles, priorities and attitudes toward risk can differ dramatically, even when they operate in the same industry or employ the same number of people.

At Simply Business, we focus exclusively on small businesses and connect owners and agents with coverage options from multiple carriers. This has given us a uniquely rich, data-driven perspective into the different needs, priorities and purchasing behaviors of small business owners across a range of industries.

For insurers, brokers and distributors, adapting to this new “small business as usual” is essential to making better decisions and delivering a better customer experience.

Looking Beyond Price

It's easy to assume that small business owners, particularly those operating on tight budgets, are primarily concerned with finding the lowest insurance premium and of course, to an extent, price matters. But looking into the data tells a more nuanced story.

While affordability is important, meaningful segments of small business owners actively seek broader coverage, even when it comes at a higher annual cost. This is a pattern we’ve observed in our own marketplace. They're not necessarily looking for the cheapest policy. They're looking for the right protection at the right price for their particular circumstances.

This challenges the notion that a one-size-fits-all approach can adequately serve the small business market.

It also highlights the importance of choice. Providing access to different carriers, coverage options and price points allows customers to make decisions based on their individual needs and priorities.

Understanding a Changing Small Business Landscape

The rise of solopreneurs and microbusinesses makes this distinction increasingly important.

There are tens of millions of solopreneurs in the United States, but the term itself tells us surprisingly little about their insurance needs. A business owner just getting started may have very different priorities from someone who has been operating independently for a decade.

Even among businesses of similar size, differences in industry, experience and stage of development can influence the coverage customers need and the decisions they make.

For carriers and brokers, this means moving beyond broad categories and looking more closely at the characteristics that distinguish one customer segment from another.

Data can help identify these differences, inform product development and create more relevant insurance options. Just as importantly, it can help the industry avoid making assumptions about customers based solely on business size or other surface-level characteristics.

It’s important, however, not to add complexity for complexity’s sake. Most customers already find insurance complicated enough. Instead, as an industry we need to use a deeper understanding of customers to make finding appropriate coverage simpler.

Turning Information into Industry Insight

Better customer understanding is only part of the opportunity. Data can also improve the decisions carriers and distributors make together.

Digital insurance marketplaces occupy an interesting position in this ecosystem. By connecting customers with multiple carriers, they can develop a broader view of demand across different industries, business types and coverage needs.

Those insights can be valuable to carrier partners, particularly when evaluating opportunities to serve new customer segments or reconsider underwriting appetite.

For example, understanding the volume of prospective customers within a particular class of business can help carriers make more informed decisions about where to focus their attention.

The goal isn't simply to collect or exchange more information. It's to turn relevant information into actionable insights that benefit both sides of the marketplace and, ultimately, the customer.

Preparing for the Next Generation of Entrepreneurs

Looking ahead, I believe the need for this more nuanced approach will only grow.

Just as the number of small businesses is growing, the definition of one is expanding as well. Alongside traditional businesses, we're seeing more Americans pursue independent work, solopreneur opportunities, side hustles, temporary gigs and new ways of earning a living.

These business owners may not fit neatly into the categories or assumptions our industry has historically relied upon. Their needs may change as their businesses evolve and their expectations of the insurance buying experience already differ from those of previous generations.

Meeting those expectations will require an industry that's willing to continually challenge its assumptions, recognize emerging data patterns and adapt accordingly.

Ultimately, better insurance decisions begin with better customer understanding. Data gives us the opportunity to move beyond broad generalizations and recognize the diversity of the businesses we serve.

The insurers, brokers and distributors that use those insights thoughtfully will be better positioned to serve not just today's small business owners, but the entrepreneurs of tomorrow.