Wednesday, June 19, 2024

EXCLUSIVE: Challenger broker hubb introducing usage-based broking for SME insurance

Challenger broker hubb acquired AI-based insurtech Digital Fineprint (DFP) to expand their use of data tools in insurance broking. With the move, hubb will incorporate DFP’s data sourcing platform to better automate their services, cutting the time spent on routine administration.

CEO Mark Costello spoke to FF News about the acquisition. “DFP has built some phenomenal technology. They just hadn’t found the right place to point that technology. We are already making huge strides in tech stack evolution because of the expertise we’ve brought into the business with them. And because we now have people who we sit with every day who understand the challenges in the market, we can help steer that technology, and that takes us two years further ahead in our tech evolution than we thought we would be at by buying that business.”

hubb recently told Insurance Age that they intend to increase their gross written premium (GWP) to £11 million by the end of the year. The Glasgow-based broker, also a member of FinTech Scotland, added that they hope to reach £20 million in GWP by 2023. This target will be used to ensure the expansion of new business lines.

hubb’s broking service adopts a usage-based approach, where customers pay strictly for the services they use. The last two years have been severe for small businesses, with 370,000 businesses reported to have been rejected from claiming business interruption insurance due to the Coronavirus not being covered in their insurance policies. Coming this April, individual and employer national insurance will rise by 1.25%, the Federation of Small Business estimates that this will cost SMEs £5.7 billion.

Compounded by rising insurance premiums, the industry could see an increase in the number of small businesses choosing to go uninsured. A survey from Mckinsey & Company found that SME owners’ top factor for selecting business insurance was “good value” above all else. There was also an increase of SMEs favouring digital services as a more convenient way of looking for insurance. In a recent study by the broker, 76% of responders did not know what they were paying in their insurers commission.

SME owners are becoming more sceptical of traditional insurance policies which are not serving their individual needs. Hence, customers pay for the advice of brokers to help them better understand insurance jargon and have it be a beneficial investment for them.

hubb is looking to make insurance broking accessible and “radically transparent” for customers. The service boasts an ecosystem that gives customers a 360-view of their insurance policies, and quotes which are both good and bad. hubb believes that it is possible to automate over 70% of broking administration, with the exception of the advisory role, in which case customers have the option to speak to a person if they prefer.

COO Edward Halsey spoke about hubb’s innovative broking approach. “It’s about making the price charged for broking advice accurately reflective of the work being undertaken on the client’s behalf. That involves aligning earnings with service, a usage-based charging mechanism that is commensurate with the advice being delivered.”

Digital Fineprint uses a range of data tools to make underwriting more precise. The client data used is already in the public domain and available through the cloud, using it reduces the number of repetitive questions brokers usually ask clients. The information DFP collect includes SME proprietary data, dynamic data, and core data. These specified types are delivered to get a clearer understanding and knowledge of individual properties and companies. DFP has also developed Risk Alerts software, which uses data to calculate the specific risk of a given SME.

The integration of DFP’s services into hubb will prove advantageous for the broker’s customer-centric focus. The use of data-backed risk assessment and automation of customer information will make usage-based broking services more actionable for small businesses.

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