One major finding of the recently-released 2016 Vero Insurance Index, which surveyed more than 1500 Small to Medium Enterprise (SME) owners nationally, reveals many business owners are underinsured and don’t even know it.
“This is a golden opportunity for brokers to educate their customers of the value of the cover – especially as many SME owners see brokers as trusted general business advisers,” says Suncorp Group National Manager of Commercial Intermediaries Anthony Pagano.
The Index shows that 80% of SMEs who rank ‘being unable to trade’ as one of their top concerns, claim not to have business interruption insurance.
“There is a risk gap – they have major fears about the business failing yet are not sure if they have the right insurance cover in place,” Pagano says.
“This is a great opportunity for brokers to spend time discussing in detail how appropriate cover will alleviate their customers risk concerns if disaster strikes.”
Almost one-third of SMEs claim to be very concerned about being unable to trade for a long period of time and 31% are worried about equipment failure or breakdown.
Workplace accidents, cyber-attack and being sued are also a concern for many.
“The research shows that small business owners are looking for help in not only making sure they are adequately insured but in running their businesses,” Pagano says.
This is reinforced by new research carried out by the Index, which asked SMEs who they turn to when seeking advice about general business issues.
When asked what type of information clients would like to receive from their broker, information about general business risks (38%) rated highly as did a risk analysis of their business (43%).
“This suggests that brokers have a role to play as trusted advisers to their clients – they are not just an insurance distribution channel,” says Pagano.
The trend of SMEs moving away from broking services has stabilised in the past few years. In 2014, the Index results showed 34% of SME business owners purchased insurance solely through a broker, down from 40% the year before.
While that figure has risen to 38%, the percentage of business owners who purchase insurance direct from insurer has also risen to 57%, highlighting a gap in advice being offered to the SME segment.
NIBA Chief Executive Officer Dallas Booth says the Vero SME Insurance Index is an extremely valuable tool and recommends brokers study it carefully to look at how they can implement the findings into their businesses.
“The days when brokers could get away with simply contacting their clients once a year at renewal time are gone,” Booth says.
“To satisfy clients’ needs, and to prove their value and relevance, brokers need to go above and beyond a simple transactional approach.
“Brokers that don’t put the customer needs at the heart of all they do will find themselves out of business in five years’ time.”