How one insurer is changing the way the SME segment is served

SMALL and medium-sized enterprises (SMEs) make up the largest commercial segment in Singapore, accounting for more than 99 per cent of businesses here, and they hire over 70 per cent of the workforce. In insurance, however, this is an underserved segment.

While acquiring comprehensive coverage has traditionally not been a top priority for SMEs, Covid-19 has set some change in motion, with these businesses now paying greater attention to employees' health and wellness, talent retention, as well as skills development.

At least one life insurer is seeing payoffs from earlier moves to capture more of the SME market by reducing premiums, changing its distribution model and digitising offerings. Prudential Singapore has seen more than 20 per cent growth in its enterprise business - which covers group insurance for large corporates and SMEs - over the last two years.

The annual premium equivalent for its enterprise business division stood at S$71 million in FY2020. (The annual premium equivalent is a measure used for comparing revenue in the life insurance sector, by normalising policy premiums into the equivalent of regular annual payments.)

Back in a 2018 poll, the insurer had found that one in two SMEs did not have group life insurance, and up to 43 per cent did not have group medical insurance. Many of the businesses surveyed said insurance plans were too expensive for their small company size and that employee benefits were not a priority.

Some SMEs also do not have a dedicated human resources department, or had HR personnel also holding down other corporate functions; insurance was thus not prioritised, Jeff Ang, Prudential Singapore's head of Enterprise Business Solutions, told The Business Times.

In 2018, Prudential Singapore began to extend its reach to SMEs by departing from a broker-led model to direct sales, engagement through financial consultants, as well as its bancassurance partners UOB and Standard Chartered.

"Traditionally, insurance brokers provide a wide, established network and serve as a 'one-stop shop' for clients. But there is a growing segment of clients now who come already knowing what they want," Mr Ang said.

In the same year, the life insurer also launched PRUTreasures Flexi II, a "competitively priced", customisable group insurance plan. Mr Ang said that more than half its 2,300 corporate clients are currently on this plan. He declined to disclose a ballpark range of the premiums for competitive reasons, but noted that the premiums have remained unchanged since 2018.

In keeping with rising life expectancy and aspirations to remain at work for longer, Prudential in 2019 extended the age limit for medical coverage to 100 years old for its corporate customers. (Typically, insurers offer plans that cover employees up to 75 years of age.)

A year later, it started to offer cover for early critical illness, for seven early-stage and five intermediate-stage medical conditions, for group insurance clients.

With the pandemic reinforcing the importance of health and wellness, Prudential is also looking to help SME clients "make their employees healthier and more productive". In these aspects, the insurer offers health and wellness programmes, such as fitness and meditation classes, on-site flu jabs, health screenings and webinars. "We want to go beyond offering protection by encouraging people to be more proactive about preventive healthcare," Mr Ang said.

Last October, it also partnered with SkillsFuture Singapore to launch the SME Skills Accelerator, which helps participating SMEs identify skills development needs to meet their business objectives. Under this programme, financial consultants well-versed in SkillsFuture initiatives pinpoint the ones best-suited for each business. There are now 100 SME enterprises and companies under the programme.

With SMEs increasing their use of digital channels across the value chain, Prudential is also looking at digitising its offerings to offer more seamless and personalised solutions.

For instance, it now uses a software to offer instant quotes, sparing clients the onerous process of submitting documents and waiting for a quote. Claims can now be submitted online using electronic signatures. Prudential is now looking at consolidating its digital corporate services with a corporate version of its health and wellness app, Pulse.