VSaaS insurtech can solve SME coverage gaps

Takeaways:

• VSaaS can identify underinsured risks
• VSaaS can save time for small businesses, both on quotes and claims
• The VSaaS approach offers greater flexibility
  

Insurers should look at vertical software as a service (VSaaS) offerings as a way to reach small and medium sized enterprises (SMEs) with coverage, according to technology and service providers who spoke in a recent webcast hosted by Insurtech Insights.

According to a survey of SMEs in the U.K. conducted by YouGov for WTW and Kayna, the insurance buying process is "complex and inflexible," traditional policies leave SMEs with coverage gaps, and SMEs don't have the time and resources to assess their insurance needs. This complicates and delays the process for SMEs to buy insurance.

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VSaaS technology can help SMEs identify areas where they are underinsured, according to Anthony Borgman, head of affinity, Great Britain, WTW. "That small business owner is going to feel like they're being valued more, that they're being supported," he said.

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Implementing VSaaS to service SMEs requires APIs for basic insurance functions, according to Paul Prendergast, co-founder and CEO of Kayna, a VSaaS platform for embedded insurance distribution. 

"Getting external APIs on quote and bind, that's step one, and that's not where the industry is in totality just yet," he said. "Just get the basics in place. Get an API in place so you can quote, bind, service, do claims on a digital platform. You're way ahead of the market if you could do that."

Innovations deployed through VSaaS can help SMEs address coverage gaps, explained Esben Seyffart Sørensen, chief commercial officer at Peak3, a cloud platform serving insurers.

"With the rise of agentic AI, you only need the actuarial model," he said. "Taking distribution through all the way to the claim side, parametric payouts for small and medium size businesses, if you have a claim and you're not getting money in your account, it's costing you two, four, eight weeks of claim handling time. That's critical."

An MGA or service provider could show a SME its risk profile, including what claims are projected, according to Sørensen, and what they can do for the SME in "seconds, minutes or days," he said. "That's a value proposition. If you can do that across multiple products, liability, content, employee benefit, whatever you choose, now we're talking about a proposition that the customer understands."

An insurer working this way could bundle specialized short-term coverages, such as coverage for a small team working on a special project off site, without having to wait five days for a quote, Sørensen explained.

"Taking a step back, understanding the product, decoupling it into mini coverages, and rebuilding it to the segment you're selling to, and not being held back by the terms and conditions that we've had for 10, 15, 20 years, the coverages we've had. To get to that on the innovation side, going back to the organization, tech is one thing -- but you need people who are willing to stick their heads out."

Borgman of WTW cautioned that SMEs shouldn't assume that VSaaS has all the intelligence they need, or that insurers, brokers or data technology providers have the necessary insights. "We've got to consider everything in the round. In short, it's about making sure that you can undertake regular, validate consumer insight," he said. "Finally, it's about getting that balance right. Collaboration is key to accelerate success."