Due to the COVID-19 pandemic, small and medium-sized enterprises (SMEs) in the UK have been cancelling insurance policies and the motor lines have been the worst affected. However, this development may provide opportunities in 2021.
According to GlobalData’s 2020 UK SME insurance survey, the six most cancelled types of insurance policy this year because of COVID-19 were all vehicle-based ones out of the 20 products that medium-sized businesses were asked about.
The highest proportion was for single van insurance which saw 14.7% of policies cancelled for this reason.
While other commercial lines saw more cancellations for this reason for SMEs overall, the medium-size category is particularly relevant as it is where the biggest contracts are. Therefore, providers of these products would have seen significant losses in 2020.
“A positive outcome from this is that a lot of these would have been temporary cancellations rather than permanent as businesses were unable to travel and delivery fleets were more difficult during a year of lockdown and restrictions. Of course, online shopping has surged and many delivery-type businesses are significantly up, so these insurers who have lost this high level of business may also have picked up new customers or upsold contracts,” said GlobalData insurance analyst Ben Carey-Evans.
According to him, the development also means that commercial motor insurers will need to be proactive in winning back customers next year as normality slowly returns.
“It also presents an opportunity for insurers to win business, as there will be a significant proportion of the market looking for new insurers. With SMEs’ budgets squeezed, the key is likely to be in the value proposition of policies, but much can be said for offering flexibility as well, as uncertainty over future lockdowns and continuing restrictions remains,” he said.