The 2025 Vero SME Insurance Index has identified shifts in how Australian small and medium-sized enterprises (SMEs) engage with brokers, alongside emerging concerns about underinsurance and risk management.
The survey, conducted in September, collected insights from 1,750 SMEs across various industries.
The report indicated that client satisfaction with brokers has declined over the past year, falling from 87% to 69%. While businesses generally expressed high satisfaction during their first year with a broker, 32% reported dissatisfaction after the initial 12 months.
Key reasons SMEs choose to work with brokers include access to expert knowledge (88%), service quality (82%), and support during claims (48%).
The survey also highlighted financial challenges for SMEs, with 49% reporting a drop in turnover over the past year.
Underinsurance remains a persistent issue, as only 42% of businesses review their sum insured annually. This figure rises to 63% among businesses that work closely with brokers, compared to 48% for those that do not engage brokers in insurance decisions.
Despite these trends, two-thirds of SMEs do not consider underinsurance a major concern, even though over one-third have faced negative claim outcomes due to inadequate coverage. Additionally, 90% of businesses do not have a formal risk management plan, and 81% rarely or never conduct structured risk assessments.
Vero’s head of distribution, Anthony Pagano, noted the evolving role of brokers in addressing these challenges.
“With significant economic pressures and rapidly advancing technologies, businesses are looking to insurers for comprehensive coverage and strategic support to manage complex and evolving risks,” he said. “Brokers are essential in this role, with their expertise integral to ensuring clients have a broad view of their risks to guide them to make informed decisions.”
The adoption of emerging technologies – such as artificial intelligence (AI), electric vehicles (EVs), lithium-ion batteries, and solar panels – also continues to grow among Australian SMEs. While these innovations can provide operational efficiencies, they also introduce new risks that require careful management.
The index found that 58% of SMEs were unsure whether their businesses were using emerging technologies. Additionally, fewer than half had discussed related risks with their brokers.
The index showed a shift in how SMEs purchase insurance, with fewer businesses relying solely on brokers.
In 2018, over a quarter of SMEs used brokers for most of their insurance needs, but by 2025, that figure had dropped to 10%. Instead, 74% of businesses now use a mix of direct purchases and broker services.
Pagano pointed to changing business preferences as a driver of this trend.
“Businesses are showing an increased desire to work with brokers on a tailored basis, with 44% now opting to purchase portions of their insurance themselves. Thirty-eight per cent say this is to try to streamline their processes and boost efficiency,” he said.
While direct purchasing has become more common for simpler insurance products such as commercial motor vehicle, workers’ compensation, and travel insurance, long-standing broker relationships remain strong.
The index found that 73% of businesses had never switched brokers, with service quality and trust being the primary reasons. Only 18% cited difficulty in switching as a barrier.
A separate QBE report examined how micro and small businesses – those with fewer than 10 employees – view insurance.
The findings indicated that insurance plays a role in business confidence, with 79% of micro-SMEs reporting that insurance provides peace of mind, 81% saying it helps them feel secure in their operations, and 53% noting that it gives them confidence in making financial decisions.
