Research by Suncorp-owned insurer Vero has revealed how much the SME sector values insurance – with 85% having made no changes to their business coverage despite two thirds experiencing a decline in revenue due to COVID-19.
The research, which relied on 500 SME survey responses during the global health crisis, was undertaken to gain insights into the sudden impact of the virus on the sector’s businesses, insurance purchasing behaviour and perceptions of brokers and the overall insurance industry.
“Vero’s SME research continues to show maintaining insurance cover is vitally important for business owners. Instead of cutting insurance, most SMEs (88%) made some changes to their business model or operations,” said Andrew Mair (pictured), Vero’s executive general manager.
“The most common business changes included reducing staff hours (33%), implementing remote working for their workforce (29%), or reducing costs (28%).”
Only 2% of those surveyed cancelled all their insurance, while 3% admitted to removing elements of their policy and 4% reduced their sum insured.
Mair says this is telling of the relationship between SMEs and their brokers being founded on trust – they believe they receive valuable advice to get them through the most challenging of circumstances.
“SMEs are turning to their brokers for advice on how to adapt their business and ensure their insurance suits the changing circumstances, rather than risking it and going without cover,” he said.
Almost half, 42%, of SMEs had been in contact with their broker, with this figure rising to more than two thirds, 70%, for businesses that had suffered a decline in revenue.
Mair claims conversations between brokers and clients had been helpful for the majority - 71% - of SMEs, with those proactively being contacted directly by their broker reporting higher satisfaction, 84%, in comparison to the 58% who had approached their broker themselves.
“Businesses are looking for their broker to proactively help in this uncertain market – they want to know more about government assistance, their obligations as an employer, employee well-being, and how they can adapt their business,” Mair explained.
According to Vero’s research, broker clients predict the impacts of COVID-19 will last up to one year, slightly longer than the average SME who expects to experience pressures for approximately six months.
“Staying in regular contact with clients will help brokers understand the immediate and long-term changes occurring to their clients’ businesses, the impact on their insurance program, and any updates required on their risk and exposure factors,” Mair continued.
Researching the pandemic’s impact on the SME sector is important to Mair because, he says, they represent a major contributor to the Australian economy, creating millions of jobs, producing goods and providing valuable services.
“While not all businesses were impacted equally, almost all SMEs were required to adapt in one way or another as a result of COVID-19. Interestingly, the majority of the businesses surveyed plan to keep at least some of their changes in place now that restrictions are lifting,” he said.