High volumes. Deep experience. Even deeper pockets. The enterprise business has long-held sizable advantages over the SMB, but digitalization is narrowing that advantage.
AI and automation are now powering smart solutions that can service customer needs at scale, enabling SMBs to create efficiencies, open paths to growth, and free people to focus on the areas where humans excel—relationship-building and innovation—despite their fewer labor resources.
The value of these solutions, like AI-powered route optimization and load matching, certainly hasn’t been lost on the transportation industry. It’s investing heavily. In fact, research firm MarketsandMarkets projects that the transportation industry’s AI market will grow to $10.3B by 2030.
And, while the insurance industry has been slow to make the digital leap forward, it’s now making big strides toward delivering similar smart solutions to the transportation space—solutions that are leveling the playing field for SMBs.
Insurtech enables SMBs to transfer cargo risk on the fly
Before the insurtech movement, high-value loads were the domain of enterprise businesses when capacity was tight. Underserved by the insurance industry, SMBs simply couldn’t transfer risk on a transactional basis without consuming their already-thin margins. Likewise, smaller freight brokerages and carriers moving a half-dozen high-value loads a month couldn’t justify the expense of an annual all-risk policy.
At the end of the day, it meant doors to some opportunities remained closed—loads that could fill empty backhauls and deliver higher profit margins.
Digital insurance, however, is throwing that door wide-open. Harnessing newly-expanded data visibility, insurtech solutions can leverage both historical data and predictive analytics to deliver dynamic pricing and products on a granular level. The result: Immediate access to cost-effective, per-load coverage.
That access is relieving smaller carriers of the pressure to purchase $250K or $500K annual policies to service high-value loads. Likewise, it’s freeing smaller freight brokerages of the worry that comes from relying on their carrier’s insurance—knowing that if there’s a loss and the carrier goes out of business or a claim is denied, they won’t get stuck holding the bill.
Instant coverage for high-value loads opens up capacity
While SMB brokerages can service high-value loads when there’s plenty of capacity, as that capacity tightens the work becomes far more labor-intensive and less profitable. Competing for the same small pool of carriers with higher cargo limits, brokers would see margins disappear as rates skyrocketed—if they could find trucks at all.
The advent of end-to-end digital cargo insurance solutions, however, is directly addressing this limiting factor. Able to cover high-value loads internally and on an as-needed basis, SMBs no longer have to search for the high limit carrier needle in the capacity haystack. Instead, they can book loads with the carrier of their choice—even when they’re only carrying a $100k cargo policy.
It’s precisely this challenge that Michigan-based 3PL, Fifth Wheel Freight, was trying to resolve when it searched for a digital solution. Once implemented, it reported both labor efficiencies and an 400% increase in capacity—outcomes that have enabled them to grow with their customers and retain their high-value loads.
Digitalization of insurance is empowering SMBs to pursue new business
Once underserved by the insurance industry in favor of more profitable enterprise businesses, digitalization is now enabling small and medium-sized businesses to immediately transfer their risk and protect their future growth.
That means today’s SMB doesn’t need high volumes, an experienced risk management team, or deep pockets to service high-value customer loads. Operating as a one-stop shop, they can retain all of their customers’ business, while also pursuing new business that was once the realm of the enterprise.
At a time when so much is uncertain, it’s nice to know growth opportunities are there for the SMBs that are embracing digitalization.