The latest Vero SME Insurance Index gleaned from Australian research into Australian brokers and the industry has revealed a harsh truth for brokers – more and more SMEs are turning to online platforms and those using brokers are declining.
This is the sixth year that Vero Australia has released the index which has become a trusted resource for brokers looking to remain competitive and integral to the SME market.Vero New Zealand will be releasing the firs new Zealand SME Index this year.
According to Anthony Pagano, head of commercial intermediaries at Suncorp, there has never been a more important time to explain to small and medium-sized enterprises (SMEs) the value that brokers can bring to their businesses.
“Digital disruption is firmly here and brokerages, as well as the broader industry, need to develop strategies to adapt to this new reality, which has seen broker usage declining,” he says.
The survey shows that a decreasing proportion of SMEs bought their insurance policies through a broker, from 40% in 2013 to 31% in 2016. Also, the number of SMEs that bought their last insurance policy online increased from 20% in 2013 to 27% in the latest survey.
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“Online channels are having a significant impact,” says Pagano. “2017 is shaping up as a year of challenges for the insurance industry.”
Pagano emphasises that change is accompanied by opportunity and that brokers who understand the risks, develop appropriate strategies and embrace the prospect of change will thrive in the years to come.
“There is no silver bullet solution, but current best practice suggests brokers who develop proactive strategies to engage with disruption will be the ones best equipped to grow and thrive in the modern era,” he says.
Pagano advises brokers to consider embracing and integrating digital capabilities and reinforcing the unique benefits they bring to customers.
“The good news is that broker clients who get advice from their broker are significantly more satisfied than those who don’t and are more likely to see greater benefits from working with a broker,” he notes.
“Advice can be a valuable way of demonstrating expertise and, to be most effective, needs to be tailored to suit the clients’ size and needs.
“Brokers could consider a more collaborative approach to delivering advice to some clients, so that these SMEs feel more involved in the process.”
Vero Australia surveyed more than 1,500 small business owners nationally in October for its sixth index, which is being released in four tranches over 2017. The first issue of the index’s findings focuses on the general market landscape, including SME usage of brokers and insurance advisors.
Later this week we’ll bring you reaction from brokers to the survey’s results and what they feel the broker market here in New Zealand can do to stay relevant. Also, once Vero has New Zealand results at hand, we'll be sharing them with you.
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