Underinsured SME owners present opportunities for brokers

A leading annual study has found that many SME owners are confused about their insurance coverage in key areas which gives brokers an opportunity in an important market

Underinsured SME owners present opportunities for brokers

Insurance News

By Jordan Lynn

The Vero 2016 SME Insurance Index has found that SME business owners could be underinsured in key risk areas, which offers a big opportunity for brokers.

The Index found that, despite 39% of business owners claiming to be knowledgeable about their business insurance, 32% listed being unable to trade as their biggest business concern, with 80% of those believing they don’t have business interruption cover.

Anthony Pagano, national manager – commercial intermediaries at Suncorp Group, told Insurance Business that business-owners’ confusion offers brokers key opportunities.

“I think the overwhelming statistics that come from the Index show that the SMEs are confused,” Pagano said.
“When people are confused, they are looking for someone to simplify things. How you simplify things is getting back to basics. Getting back to basics is explaining in very simple language what is business interruption.”

For the first time, the five-year-old Index has surveyed SME owners on what concerns them about running their business, a list topped by increasing costs (47%), economic downturn (42%) and competitive activity increase (34%).

While these may be uninsurable risks, Pagano believes that brokers can benefit by positioning themselves as trusted advisers with experience running SME business.

“Brokers should be looking to use their own experience as SMEs themselves,” Pagano continued.
“Brokers have similar concerns and they have the same fears.

“They are concerned with increasing costs, they are concerned with economic downturn, they are concerned with increased competition, and the beauty of comparing themselves to their customer is that they can relate, understand and they can empathise.

“I think why this would be so powerful is because most brokers who have evolved into the 21st century are very successful as business owners, and I think clients would want to be associated with that success.”

Those that use brokers rank them alongside accountants and bookkeepers as being the most popular source of general business advice for SME owners, and Pagano believes this is an important step for brokers.

“The Index has demonstrated that SMEs are looking for an on-going relationship. They are not looking for a once-a-year email or a once-a-year contact,” Pagano said.

“If brokers are able to have those more general conversations more regularly, I’m convinced that SMEs would take quite strongly to that because they are looking for someone who is actually going to be supporting them and grow their business.

“This matters because trusted adviser relationships are more loyal, more profitable and, ultimately, more rewarding for all involved.”

To view the full report, visit the Vero website.

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