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Taking Care of Small-Medium Business

In the 1973, Bachman Turner Overdrive hit song, Taking Care of Business, it talks about employees getting annoyed and becoming self-employed, something that is happening 45 years later in the new gig economy. The growth of new small and medium businesses and the fight for talent is creating challenges and opportunities for insurers. And just like the song … in today’s rapidly changing marketplace with new products and competitors, insurers must take care of SMB businesses to grow, let alone survive.

Change is being forced on insurers, whether they like it or not. A new insurance paradigm is being crafted, regardless of whether incumbent insurers choose, or are able, to play to compete in a new digital era … Digital Insurance 2.0.

Uniquely, SMBs are at the forefront of this digital shift and at the center of business creation, business transformation and growth in the economy. Representing the vast majority of all U.S. businesses, SMBs promise huge market potential for insurers to provide coverage for both traditional and new, emerging risks. However, the business models and products from Insurance 1.0, present during the last 30-plus years and built around the Silent and Baby Boomer generation business owners, will not work in a Digital Insurance 2.0 era that is driven by Millennial and Gen Z business owners. Succeeding in the SMB market requires an understanding of the unique characteristics of individual segments and developing appropriate strategies for each.

New Expectations and Behaviors Set a New Competitive Bar

To help insurers capture these opportunities and adapt to Digital Insurance 2.0, Majesco recently conducted a new primary research study. The study built on last year’s research, The Rise of the Small-Medium Business Insurance Customer, which revealed increasingly higher participation rates in digital trends and technologies as well as interest in considering new insurance-related digital capabilities, new products and new business models. In this year’s research, we dived deeper into these new products, business models and capabilities to assess their interest and their potential to accelerate the shift to Digital Insurance 2.0 offerings — offerings that could challenge traditional Insurance 1.0 business models. We decomposed a range of new products and business models into individual attributes and gauged reactions to them across both business size and owner generation. The results provide insight on the competitive bar set by these emerging new innovations and competitors.

So, what did we find?

The new research report, Insights for Growth Strategies: The New SMB Insurance Customer, underscores an acceleration in digital-driven SMB behaviors and expectations, as well as strong openness to considering buying and switching to new products, services, capabilities and business models that reflect Digital Insurance 2.0. In analyzing the data, we found that the differences across the business size and owner generation segments have vital implications for insurers on why and how they must shift to engage and provide innovative, relevant products to an increasingly digitally oriented SMB market.

Interestingly, between the 2016 and 2017 Majesco surveys, we found an acceleration of as much as 20% in digital behaviors and the use of new technologies, particularly for Gen X and Boomers. Gen Z and millennials also maintained their digital leadership position, with 80%-90% across all company sizes engaging in at least one trend or technology, but often engaging in multiple trends or technologies. These technology-driven behaviors signal an acceleration across all business sizes and generations in reshaping insurance to Digital Insurance 2.0. Increasingly, these behaviors and technologies are embedded in new products and business models introduced by new competitors, which will attract new customers and encourage existing customers to switch.

See also: How Small Insurers Can Grow  

The top trends and technologies across all the business sizes and generational groups included:

  • hired a freelancer/independent contractor for a limited period,
  • used cloud-based subscription fee software (e.g. Microsoft Office),
  • paid for something with ApplePay/Samsung Pay,
  • used smart devices within the office/building,
  • worked as a freelancer/contractor,
  • and used an app to monitor the business office or building for security or equipment.

Most striking, the relationships between generation and company size accentuates two significant gaps; a growing generational gap and a widening gap between Insurance 1.0 and Digital Insurance 2.0, whereby participation is greater for the larger and younger segments, and decreases for the smaller and older segments. This sets the stage for customers shifting to fresh, innovative products and business models introduced by new competitive players.

New Innovations and Competition to Take Care of SMB Businesses

The digital revolution is rewriting the rules of business and, with it, redesigning organizational and business model structures. Insurers are faced with a predictive dilemma: Among all of the new models and products emerging in the insurance market, which ones will gain traction in the market? How fast? And for whom?

Based on our research, a number of top-rated attributes with overwhelmingly strong appeal offer immediate options for insurers to test and learn in the market. For example, reducing costs and risks through value-added services, quote and buy and social networking options are areas where insurers can immediately begin to innovate. There are numerous additional possibilities for tailoring combinations of attributes to meet unique generation and company size segment preferences that offer innovative opportunities.

In particular, younger generation business owners from the two larger business sizes are the most interested in innovations for insurance and therefore more likely to consider new products and competitors. Many of the new competitors are using different combinations of the 30 attributes we assessed as building blocks to innovate their products and business models. We tested SMB reactions to some of these new business model concepts launched in the market the last several years.

The results highlight strong interest in these new business models, particularly among the younger generations and larger SMB segments. Initial reactions to the business models generally showed positive ratings of 50% or higher. But when adding the neutral “swing groups,” interest significantly rose to more than 80%. This suggests a strong openness to consider these new models. The next question is, will they purchase?

The answer is, “Yes, they will.” Gen Z and Millennials, in particular, indicate positive “likelihood to purchase” ratings of 50%.  But, when adding the “swing groups,” purchase potential jumps to 70%-90% across most of the segments, emphasizing how rapidly swing groups will likely shift the market. While these new models’ long-term viability is yet to be determined, the growing interest and likelihood to purchase suggests they have significant potential to capture the market opportunity, particularly the next generation of SMB business owners.

Generational Transition of Leadership … It’s a Matter of Time and Experience

SMB’s market potential is significant: U.S. Census data show that those with fewer than 10 employees represent nearly 80% of all businesses in the U.S. And while distribution economics dictate that the optimal way to reach them is through digital channels, with direct-to-business models via self-service, the research results indicate a “one size fits all” approach will not work. Two powerful forces are compelling insurers to make the transition to meet the needs of this important market: time and experience.

First, it’s just a matter of time before traditional operating models will no longer work based on a combination of new factors. By 2020, more than 60% of small businesses in the U.S. will be owned by millennials and Gen Xers — two groups that greatly prefer digital engagement. The 2016 Upwork and the Freelancers Union’s annual survey, Freelancing in America, estimated that 35% of the U.S. workforce is made up of freelancers and independent contractors, the basis of the new gig economy. Furthermore, globally, millennials appear to be more active in the startup space. Dubbed “millennipreneurs,” they are starting more companies per person, managing bigger staffs and targeting higher profits than their baby boomer predecessors did. And finally, a 2016 survey of U.S. young adults 15-32 years old, Gen Z and millennials, showed that 55% expressed interest in starting their own business or non-profit someday.

Second, it’s about experience. Digital experience. As the transition of SMB businesses from the baby boomers and Gen X to the next generation of Gen Z and millennials continues to accelerate, digital experience matters more and more. The older generations have extensive experience with Insurance 1.0, but despite their increasing use of new trends and technologies, they lag in digital experience and comfort in embracing Digital Insurance 2.0. In contrast, Gen Z and millennial SMB owners are overwhelmingly embracing and expecting Digital Insurance 2.0 models.

The question is … are you ready?

Bridging the Business Gap of Insurance 1.0 to Digital Insurance 2.0 to Take Care of SMB Business

While Insurance 1.0 preferences are firmly in place with the smallest businesses and older-generation business owners, insurance companies must rapidly adapt and innovate to retain them as the businesses move to a younger generation of leaders. Adding fuel to the shift, the growth in the gig economy and SMBs’ rising Digital Insurance 2.0 preferences are creating a significant business gap in products and business models that insurers need to bridge, rapidly.

How to proceed?

Insurers can use these findings to strategize, prioritize and develop unique business plans to capture these diverse SMB market segments. With the pronounced differences in patterns across generations and business sizes, different market and product strategies are necessary. To facilitate this thinking, we developed SMB segment playbooks that highlight the attributes (the “ingredients”) that constitute the “ideal” insurance offerings (“the innovations”) for each segment (the “recipe model”).  But regardless of segment, insurers must rapidly move to a new generation of digital insurance platforms that personalize and maximize the customer journey with deeper engagement, enable process digitization, use digital data-driven insights, adapt to rapid market changes or opportunities and enable rapid rollout of new products and capabilities … a Digital Insurance 2.0 platform.

See also: Secret Sauce for New Business Models?  

It is a new age of insurance — a digital age.  And it’s all about taking care of business … small-medium businesses. For those willing to bridge the business gap from Insurance 1.0 to Digital Insurance 2.0 … join the chorus with the new generation of SMB customers!

And we be taking care of business (every day)
Taking care of business (every way)
We’ve been taking care of business (it’s all mine)
Taking care of business and working overtime.

How to Embrace Workforce Flexibility

Because of the economic crash in 2007, many people were left scrambling for work, any work.

Those who were determined, but still came up short, looked inward to their skill sets and assets to find relief.

The answer quickly became obvious; what is now referred to as the flexible workforce or sharing economy, is made up entirely of freelancers and independent contractors.

This new group of freelance workers now makes up more than 35% of U.S. workers and earned more than $1 trillion last year.

This information is found in a recent survey, “Freelancing in America: 2016,” which was published by Upwork, one of America’s largest freelance workplace platforms.

The Gig Economy: A Brief Introduction

The gig economy is a term that describes a portion of the U.S. economy that is made up of freelancers. It is often used, interchangeably, with “sharing economy,” “collaborative consumption” or “access economy.”

This growing army of gig workers has become an integral part of the workforce, available on an on-demand basis.

This has allowed innovative businesses to pivot and remain nimble. Indeed, in an era where consumers are increasingly more interested in access over ownership, flexible workforces have become powerful tools for businesses.

Although many believe this segment of the workforce may be a fad that will soon to be diminished when unemployment numbers eventually plummet, a closer look at available data indicates otherwise.

Reportedly, the gig economy has grown every year over the past five, and there are solid indications that this trend will continue.

See also: 9 Impressive Facts on Sharing Economy  

What the Feds Report

Well, they haven’t quite caught up yet – although they’re getting there.

The labor experts in D.C. minimize the gig economy by referring to gig workers as “contingent workers” (any position not expected to last longer than one year).

The feds report that that this segment makes up about 4% of the total workforce.

Looking more closely, however, one can easily determine that the most recent survey numbers used by the Bureau of Labor Statistics refers to data accumulated more than 10 years ago.

I don’t feel like we need to delve into why that’s an issue, correct?

How the Gig Economy Is Growing

The gig economy continues to increase as traditional companies look for solutions to workforce issues.

Although “outsource” is a term that consumers and traditional employees detest, no one has a problem with a temp in the workplace.

But when you use the word “outsource” (which is what a temp employee is), many Americans think of good American jobs being sent overseas where workers will work for pennies on the dollar.

The gig economy is growing because entrepreneurial gig workers now have the means to share with others how they can become freelancers and realize their dreams of being self-employed.

Platforms such as Upwork, Airbnb, Uber, TaskRabbit, WeGoLook and many others seamlessly connect this new freelancer class with those who have paid work available.

This entire process is all facilitated by innovative mobile technology and apps.

What’s not to love about that?

It’s certainly not for everyone, but for those who even feel a mild burn of the entrepreneurial spirit, they can use their skills or assets to become part of the gig economy.

Why The Gig Economy Is Growing

The gig economy (flexible workforce) continues to grow because America needs it to grow.

Companies can access skilled on-demand workers for one-off or continuing tasks.

Thanks to on-demand worker platform, businesses can now access expert freelancers to perform critical functions that are temporarily needed.

According to Jobshop, nearly one-third of B2B companies plan to hire gig workers over the next five years.

Further, a report by Fieldglass indicates that 95% of B2B companies not only understand, but recognize, the need to incorporate the gig economy into their business models.

The American workers are changing. Many regard employment as a job totally unrelated to what their life goals may be.

Goals that were formed in their minds at a young age and continue to burn deep in their hearts.

Even highly skilled workers earning terrific incomes imagine what it would be like to do what they love to do rather than what they have to do.

Although born out of necessity, gig work has become a compromise for millions of hard-working Americans.

Freelancing allows them to choose to do what they love and what they are best at. It provides the flexibility to work the hours of their choice, spend more time with family and become highly skilled experts in a field they love.

Embracing the Flexible Workforce

The insurance industry can embrace this growing flexible workforce made up of skilled freelancers in a number of ways.

For starters, insurance carriers can use skilled gig workers to create efficiencies across many channels in their organization.

Although major insurers have embraced technology, they continue to fumble the ball streamlining their processes and supply chain.

Similar to the federal government, large insurers have many layers of bureaucracy that at times put the breaks on workflow, innovation and even communication.

The result typically frustrates the consumers they have committed to serve.

In the digital age where consumers crave access, convenience and timely services, cumbersome policies and bureaucracies will fade. Quickly!

Areas that need rethinking and refocus are those where consumer interaction is critical.


There are many critical areas of communication that need not be assigned to full-time workers.

These tasks are generally performed on-demand and for specific reasons and following certain events.

Using a skilled freelancer who can be available on an as-needed basis for a short period makes more sense than using a highly paid (when you consider compensation plus benefits) full-time employee.

See also: Benefits: One Size No Longer Fits All  


Streamlining the claims process is a priority for every insurer because it’s not only a profit-earning department, it has many functions considered menial to an experienced licensed adjuster.

Tasks such as consumer visits, picture taking, damage verification and more could easily be assigned to a local gig worker.

Why maintain a network of thousands of field employees nationwide when you can access hundreds of thousands of on-the-ground gig workers when you need them?

Although claims activity can be forecast to a certain degree, many insurers are caught off guard with the arrival of events such as a natural disaster.

This often leaves carriers scrambling to recruit independent contractors, who sometimes are unwilling to perform many of the tasks that a freelancer can provide.


Because marketing is about communicating with various market segments, it makes sense to contract with gig workers who specialize in that particular demographic.

For example, millennials communicate differently than Generation Xers, who talk differently than Baby Boomers.

Although each category can have similar insurance product needs, they prefer to learn about it, and make the purchase, in different manners.

Whether you are an agency or an insurer, outsourcing your marketing needs to a gig workers can make more sense than loading your payroll with different personality types so that you can accommodate the preferences of the various market segments.

Or, many companies are electing to leverage gig workers to augment their current full-time staff. Gig work isn’t a full-time or part-time discussion – they can be complimentary.

Whether you designate this growing on-demand labor force as the flexible workforce, gig economy, freelancers or outsourcing, there is no doubt that this workforce can provide skilled on-demand workers to the insurance industry.

These are workers who are doing what they know best and are passionate about.

Principals in the insurance industry should look to this flexible workforce to streamline processes that affect consumer satisfaction and save payroll dollars in the process.

As the gig economy continues to grow as a viable employment alternative for many, traditional insurers can get ahead of the curve by leveraging them and embracing flexibility.