Businesses' cover not keeping up with changes caused by COVID-19

Businesses' cover not keeping up with changes caused by COVID-19 | Insurance Business New Zealand

Businesses' cover not keeping up with changes caused by COVID-19

There is a gap between the changes business owners have made during the COVID-19 pandemic and the subsequent changes made to their insurance cover, a study by insurer Vero found.

According to the annual Vero SME Insurance Index, 79% of small- and medium-sized enterprises (SMEs) working with brokers have made changes to their business because of COVID-19. However, only 23% have discussed these changes with their broker, and only 10% have made changes to their insurance.

Among SMEs that have made changes, 26% said they will keep all the changes, while 50% said they will keep at least some of the changes and 24% plan to go back to “normal” as soon as possible.

Chris Brophy (pictured above), executive manager, business at Vero, said the identification of this gap provides an opportunity for brokers to reach out to their SME customers and provide additional value. While the changes may be temporary for some business owners, for others they reflect a “new normal” where their insurance is no longer providing adequate cover.

“We can see that the pandemic has caused SMEs to make changes to both their business and insurance, but a large percentage of broker SME clients haven’t talked to their broker about the impacts on their business,” Brophy said. “This may mean many broker SME clients are missing out on the expertise and guidance of their broker at this important time.”

Brophy also urged brokers to build trust and strengthen their relationship with SMEs, to see how each clients’ business has been impacted, and then provide advice to best suit their business needs.

The survey also found that 23% of SME owners have had to dip into their savings, get loans or use retirement funds to stay afloat since the onset of the pandemic. The primary concerns of business owners were economic, regulatory and legislative changes, with data showing that Otago, Auckland and Waikato were the three most affected regions.

While New Zealand had fewer COVID-19 cases and shorter lockdowns than Australia, Kiwi businesses seem to be hit worse by the pandemic. Vero said that 39% of New Zealand SMEs reported revenue decreases of 25% or more, compared to only 13% of their Australian counterparts.