Unlocking the SME Opportunity: Data-Driven Underwriting for Small and Medium Enterprises

Small and medium enterprises (SMEs) are the backbone of the global economy, representing 99% of all businesses and driving innovation across every sector. Yet, despite their economic significance, SMEs remain critically underserved by the insurance industry. Traditional underwriting models—designed for large, homogenous risks—struggle to address the fragmented, fast-evolving, and highly diverse needs of SMEs. The result is a persistent protection gap, with 80% of high-growth SMEs underinsured or holding inadequate coverage. For commercial insurers, this is not just a challenge—it’s an $11 billion opportunity waiting to be unlocked through data-driven underwriting.

The Unique Challenges of SME Underwriting

Serving SMEs is fundamentally different from serving large corporates or personal lines. The SME segment is highly fragmented, ranging from micro-businesses to fast-growing scale-ups, each with unique risk profiles and coverage needs. Many SMEs lack a Standard Industrial Classification (SIC) code that accurately reflects their activities, making risk assessment difficult. The COVID-19 pandemic has only accelerated change: a third of SMEs are now more interested in insurance, and a new generation of younger, digitally savvy business owners is demanding digital-first, self-service experiences.

Traditional distribution channels, especially brokers, are consolidating and increasingly focused on higher-value deals, often leaving micro-SMEs neglected. This has widened the protection gap and left many SMEs without adequate support or tailored products. Meanwhile, the pace of change in SME business models—new products, services, and digitalization—means that static, one-size-fits-all underwriting approaches are no longer fit for purpose.

Why Data-Driven Underwriting is the Answer

The digital age has transformed the volume, variety, and velocity of data available to insurers. For SMEs, this means insurers can now:

Expand and enrich risk profiles using internal and third-party data, including telematics, location analytics, and real-time business activity data.
Automate and streamline underwriting by digitizing risk processing, automating triage, and using AI to support complex decision-making.
Personalize products and experiences by leveraging data to understand the unique needs of each SME, offering trade-specific coverage and contextual recommendations.
Continuously improve offerings by integrating feedback loops and operational analytics, ensuring products and processes evolve with the market.

However, many insurers are still capturing vast amounts of data without fully utilizing it. The challenge is not just technical—it’s about embedding data at the core of the underwriting process, breaking down silos, and building the agility to respond to rapidly changing SME needs.

Publicis Sapient’s Framework for Next-Gen SME Underwriting

To help insurers capture the SME opportunity, Publicis Sapient advocates for an integrated, end-to-end approach that puts data and digital at the heart of the underwriting journey. Our framework focuses on seven key dimensions:

Channel Optimization: Meet SMEs and brokers on their preferred channels, whether digital self-service, embedded insurance at the point of need, or traditional intermediated models.
Personalization and Tailoring: Use data to offer trade-personalized digital experiences and coverage, demonstrating a deep understanding of each business’s unique risks and needs.
Automation and Decisioning: Automate routine underwriting and triage, freeing underwriters to focus on complex cases and enabling faster, more accurate decisions.
Portfolio Steering: Manage risk holistically across channels in near-real time, balancing exposure, pricing, and performance.
Embedded Risk Solutions: Integrate insurance into SME workflows and platforms, making coverage accessible and relevant at the moment of need.
Continuous Improvement by Design: Leverage operational and trading engines to refine offerings, expand into new segments, and increase automation at the edges of current capabilities.
Data at the Core: Expand and connect data sources and models, providing underwriters with the right insights at the right time to support informed, agile decision-making.

Realizing the Opportunity: Personalization, Embedded Insurance, and Continuous Improvement

Personalized Direct Offers: By harnessing advanced data solutions and conversational AI, insurers can deliver highly contextualized, low-friction offers to micro-SMEs—often surpassing the experience provided by brokers. This builds trust and engagement, demonstrating that insurers truly understand the business.
Embedded Insurance: There is a $60-80 billion annual opportunity in closing the global protection gap through embedded insurance. By surfacing relevant products at the point of need—such as during a business purchase or contract negotiation—insurers can capture new markets and make insurance more accessible.
Continuous Improvement: The most successful SME insurers will be those that continuously refine their capabilities, using data and digital tools to expand into new trade segments, automate pricing and underwriting, and respond rapidly to market shifts.

The Path Forward: Strategy, Technology, and Execution

Unlocking the SME opportunity requires more than technology—it demands a clear strategy, the right mix of build/buy/assemble decisions, and a willingness to experiment and iterate. Insurers must ask:

What capabilities should be shared across channels?
How can automation and data ingestion be scaled over time?
Which segments and products offer the best initial use cases?
How can technology and data tools be integrated for maximum value?

Publicis Sapient’s SPEED capabilities and proven frameworks help insurers rapidly define strategy, build proofs-of-concept, and scale successful models. By putting data at the core and embracing digital transformation, insurers can finally deliver the next-generation underwriting experience SMEs have been waiting for—unlocking growth, improving risk selection, and building lasting customer relationships.

Ready to capture the SME opportunity? Let’s connect and explore how data-driven underwriting can transform your business.