Live data on SME changes and risks

There has been a move away from static data towards live data in many areas of financial services. Whether it’s in stock trading, wealth management or even in SME lending, leading financial firms have found significant benefits and business growth from adopting live data sets.


 What are live data sets?

Live, or ‘streaming data’ is data that is continuously generated by different sources, allowing users to instantly access the updated information. This can be different types of data including weather reports, business metrics, stock quotes, tweets – really any source of data that is constantly updating.


The insurance industry is increasingly open to this new velocity of data. For example, Vitality broke new ground when they started gathering detailed insights on people’s activities and movements. And the growth of telematics in auto insurance has completely transformed the way customer interact with the industry. It can remove a lot of friction in the entire insurance supply chain, especially in the areas of underwriting, customer servicing, and claims management.


How about SME insurance?

In SME insurance, live data adoption has been much slower. Instead, insurers are relying on financials, company descriptions and risk profiles that are self-reported by the SME owner. Unfortunately, this approach can cause inaccurate risk protection. It also means that insurers and brokers are missing out on new opportunities to help serve more SMEs more completely.


In the past, all of this made sense. After all, commercial insurance was written directly on “paper” and was based on paper-based records from businesses, who were assumed to be unwilling or unable to provide live data.


But in today’s world of open data, online reviews, cloud-based accounting software and other tech-enabled developments, it’s finally possible to see live data on SMEs. In addition, this can enable insurers and brokers to track changes to companies in real-time, and not just at the point of renewal once a year. Smart InsurTechs like Hokodo have already started using live accounting data to provide trade credit insurance direct to SMEs. We are likely to see many more startups challenging the status quo in these ways.


These advances in data velocity allow SME insurers to understand both potential new customers and their existing customers, in real-time. Armed with live information, insurance professionals can tackle under-insurance in small businesses. By simplifying the tracking of changes that happen throughout the year, and delivering them when they can be acted upon, (either at mid-term or at the point of renewal), DFP’s ‘Renew’ tool ensures SMEs get the cover they need.


This might sound complicated, but in practice it means DFP deliver to insurance professionals:


  •  Net changes in directors and officers associated to an SME
  •  Changes in the number of employees that may indicate growth or shrinkage
  •  Increases and decreases in revenue
  •  ICO registration
  •  Changes to the office or property, including office moves
  •  Whether a company enters a new market or pivots it’s proposition entirely


By enabling a live view, insurers and brokers are able to connect with their SME customers in completely new ways – and encourage conversations around D&O, Property and Cyber Insurance, as well as ensure the SME has adequate cover in their existing policies.  We’ve already seen insurers proactively reaching out to their customers when a change has happened, both to offer new insurance policies but also to show a genuine care for the success of the SME they are already covering.


If done correctly, live data has the potential to create a win-win for SMEs and insurers: by proactively seeing new risks in real-time, insurers can make sure that no SME goes underinsured.


It stands to reason the movement from static data towards live data is inevitable. The first movers are already seeing outsize returns on investment, and are outcompeting the insurers who haven’t yet moved ahead.

Written by Erik Abrahamsson

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