Bridging the SMB insurance gap: Why the backbone of the economy has struggled to get the insurance it needs and how technology is helping

Walk into any coffee shop, construction site, or startup co-working space, and you’ll see it: small and medium-sized businesses powering the economy from the ground up. Yet these businesses often struggle to secure the insurance coverage they need. Unlike larger businesses, which benefit from access to a diverse range of insurance products, SMBs often face a fragmented experience that leaves many underinsured, overpaying, or confused about how to protect what they’ve built.

Limited access to suitable insurance products

Small businesses often face issues with access and a limited range of insurance options.

The insurance industry historically caters to high-value, low-risk policies — the kind that are easy to underwrite. But a one-size-fits-all model doesn’t work for many niche small businesses. Generic products that don’t fit the specific risks SMBs face can mean paying too much for irrelevant coverage or being left exposed to the things that actually matter.

According to McKinsey’s Global Insurance Report 2025, only a small portion of SMBs receive insurance that aligns with their real needs. The market simply hasn’t evolved to serve them.

This gap is precisely why Managing General Agents (MGAs) have stepped in and seen such success. The rise of MGAs reflects the industry’s growing appreciation for niche expertise and the power of specialization. MGAs understand the nuances of specific industries, enabling them to build tailored products that traditional carriers often overlook.

Risk perception and higher premiums

You can’t underwrite what you don’t understand. Niche sectors are often dynamic and misunderstood through traditional underwriting lenses. Without the ability to transparently and dynamically evaluate risk, insurers often err on the side of caution, often penalizing small businesses for what they don’t know.

Insurers need detailed data to price risk properly. But most small businesses don’t have the infrastructure or reporting capabilities to meet those demands.

The data and transparency gap is one of the biggest challenges facing the insurance market today. This is where AI and applied analytics are making the most impact.

How technology is reshaping the landscape

Insurance has always been an information business as much as it was a capital business — but the ability to exchange and make sense of data lagged. But that’s changing.

The more precisely you can understand a business, the better you can price, underwrite, and support it. At Accelerant, we use proprietary datasets with over 11,000 unique attributes that enables our Members to deliver more tailored, accurate insurance for SMBs. We’re focused on enabling better decisions—not just more decisions—by treating data as a strategic asset, not just a compliance requirement.

To learn more, check out our recent Member Spotlights here.