A recent study by one of Australia’s largest insurers has found that just around a quarter of broker clients were fully covered for their claim – so can more be done to increase the number?
According to Vero’s 2018 SME Insurance Index, some 23% of broker clients were fully covered. However, this compared favourably to just 10% of SMEs that were fully covered after purchasing insurance direct.
Anthony Pagano, head of commercial intermediaries at Vero, says brokers are clearly delivering a valuable service to clients but that doesn’t mean industry professionals should become complacent.
“Brokers have expertise in ensuring their clients have the right level of cover so that when it comes to making a claim, they can be confident they’re protected,” he told Insurance Business. “There is always room for improvement, but these results are positive and show the value of using a broker.”
The SME Index data also showed that even when brokers can’t secure 100% of the claim, they are still delivering more. For example, the results highlighted that brokers secured cover for over half the total loss in more than 87% of claims, compared to 74% for those purchasing insurance direct.
At the same time, only 13% of broker clients were covered for less than half of their loss - compared to over a quarter of direct buyers.
Of course, brokers want to see the best outcome for their clients and Pagano says there are a number of methods available to increase the rate of full coverage.
“The first step is to have the right policy in place to meet the SMEs’ specific business needs,” he told Insurance Business. “This is where the broker’s knowledge and experience, and their relationship with their client and insurer, is vitally important.”
Pagano also says it can’t be overstated enough that brokers must understand their clients.
“Our 2018 Index results showed the importance of brokers understanding their clients’ businesses and being aware when significant changes take place,” he says. “If they do this, they can assist and advise when their clients are looking at their insurance arrangements, to ensure their cover is appropriate.”
Discussing covers such as management liability, cyber risks and even tax probe can also help SMEs better understand their exposures and the insurance protection available, says Pagano.
“These relatively newer types of insurance are not widely known by SMEs but are covering vital aspects of their business,” he says. “In addition, there are plenty of emerging trends and claim examples for more traditional covers such as business interruption, machinery breakdown and even product recall that can impact a client but who are sometimes not convinced to take out the insurance until it is time to make a claim.”
Finally, Pagano says brokers shouldn’t overlook the importance of partnering with insurers to improve their value offering and boost their own understanding.
“It is always important for brokers to work closely with insurers to stay on top of the latest product information so they understand the policy and also have access to market insights,” he says.