BREAKING NEWS: SMEs turning their backs on brokers

BREAKING NEWS: SMEs turning their backs on brokers

Insurance News

By Jordan Lynn

Small businesses are turning their backs on brokers and are increasingly moving online for their insurance needs, according to the latest Vero SME Insurance Index.

The survey of 1,500 small business owners found that the proportion of SMEs who bought their insurance policy through a broker decreased from 40% in 2013 to 31% in 2016.

The number of business owners who bought their last insurance policy online rose from 20% in 2013 to 27% in this year’s survey.

“Online channels are having a significant impact on the way that Australian small businesses buy insurance, with more than one in four businesses buying their policies online,” Anthony Pagano, Vero’s head of commercial intermediaries, said of the results.

“There is no silver bullet solution, but current best practice suggests brokers who develop proactive strategies to embrace change will be the ones best equipped to grow and thrive.”

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The index found that SMEs that seek professional advice, such as from accountants, lawyers, business advisers and industry bodies, as well as insurance brokers and insurance companies, had fallen from 84% in 2015 to 79% this year.

Respondents are increasingly receiving advice from peers such as friends and family, colleagues and other business owners. This year’s index found 52% seek this informal advice, compared with 46% last year.

Pagano said that this increase in informal advice is another worry for brokers, as it means SMEs are making complex decisions on their risk profile and insurance needs without seeking the correct advice.

However, the Index is not all bad news. The satisfaction of clients that do use a broker increased and Pagano noted that brokerages can consider two key strategies to help boost their SME business.

Brokers should look to embrace and integrate digital capabilities and reinforce the benefits that using a broker can bring to a business owner.

“Advice can be a valuable way of demonstrating expertise and to be most effective, it needs to be tailored to suit the clients’ size and needs,” Pagano continued.
“Brokers could consider a more collaborative approach to delivering advice to some clients, so that these SMEs feel more involved in the process.”

Related stories:
Underinsured SME owners present opportunities for brokers
Is all-around risk advice the future of broking?

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