As part of a series of articles we're calling The Future of SME Insurance, we've spoken to three of the most innovate companies in the insurance space about how technology and data is changing how the industry works and what they think the future will look like for both insurers and SMEs.
In part two we're speaking with Hokodo, an Insurtech that works with wholesalers, online B2B marketplaces and other merchants to make selling to business buyers easier. For more information on Hokodo and how DueDil is helping them, check out our case study - How Hokodo is transforming insurance for SMEs with the DueDil API.
Has technology helped you to serve and support SMEs? What can you now do that you couldn’t do before?
Yes, our business model would have been impossible 5-10 years ago. Technology, and in particular access to large amounts of data via APIs, enables us to credit score a company and determine whether a sale to that company can be insured against non-payment in less than 1 second. This in turn allows us to embed our solutions into customer journeys on our partners websites. For example, we integrate into online marketplaces so that businesses can trade with each other and benefit from protection against non-payment in real time
Which kinds of data are the most difficult to obtain when it comes to underwriting SMEs?
There is a real gap in the market around fraud verification of SMEs. When I deal with a consumer, there are reliable methods to check that the consumer's address is genuine, and that the person I'm dealing with is who they say they are
When it comes to companies, it is much more difficult to establish that the individual I'm dealing with genuinely represents the company they claim to represent, particularly if they are not the owner or director of the company.
It is even difficult to find out whether a given trading address is associated with a given legal entity. The main data sources for trading addresses rely on web-scraping. But that is only ever going to provide partial coverage, and it is subject to the risk that fraudsters impersonating a company create a website which lists the fraudulent address
In your opinion, is the industry moving quickly enough to embrace the opportunity technology gives? What are some of the things that the industry could focus on?
The insurance industry has been very slow to embrace the data sources which are now available on SME businesses. For example, we recently renewed our own insurance cover, and had to fill out multiple proposal forms all asking the same questions about our company registration number, our address, our financials, our payroll, our share capital etc.
All this information is available either from public sources (e.g. Companies House), from data providers (e.g. DueDil), or from my accounting system and our bank account. I would be very happy to grant read-access to our bank accounts and accounting system if it spared me filling out more forms. And to be honest I'd even be willing to forgo getting the cheapest price for my cover to do so. It blows my mind that insurers can't get their act together to use these information sources when their customers are crying out for them to do so.
For more information on how tech is impacting insurance you can download The Next 10 Years in Insurance - a research report by Insurtech Insights in partnership with DueDil or why not check out our webinar - How real-time insights and technology are transforming pricing in commercial insurance.