Small businesses are becoming more receptive to alternative purchasing routes such as the telephone and the internet for buying insurance cover. And, when they do, they expect simplicity. They want to be able to choose from a selection simple solutions that are already packaged to accommodate the risks that are relevant to their industry or business.

According to a survey of SMEs in the United Kingdom 34% of small businesses are willing to arrange their insurance over the phone. 46% of the respondents also indicated that they only purchased packaged insurance products in 2008. The majority of SMEs that said they would buy business insurance online were inclined to buy less complex products.

The expectectation is that the picture in South Africa will be pretty much the same. The direct channel has become a major distribution platform for motor and household insurance and SMEs are also recognising the benefits.

SMEs are more open to the idea of purchasing business insurance direct due to speed and convenience, and they are becoming increasingly price-sensitive thanks to the recession.

The direct channel, specifically the internet, will continue to gain prominence as a purchasing route for business insurance in this country because it saves companies time and money.

There is massive growth potential for direct insurers that are able to answer to the demand for affordable, no-fuss, appropriately-packaged business insurance products for SMEs.

In South Africa, SMEs account for over half of the national economic output and yet, despite the size of the flourishing SME market, there are few short-term insurers offering products that are tailored to the specific insurance needs of smaller businesses.