Now in its fifth year, the Vero SME Insurance Index has grown to become a key resource for brokers looking to remain relevant and to retain and grow their presence in the SME market.
More than 1500 SME business owners were surveyed as part of the 2016 Vero SME Insurance Index, which was released in March. There were a number of noteworthy findings that pinpoint great opportunities for brokers to prove their value as trusted insurance advisers to clients and to grow their client base and revenue streams.
Overall, the movement towards SME owners abandoning brokers for direct insurance has stabilised. In 2014, the Index results showed 34% of SME business owners purchased insurance solely through a broker – down from 40% the year before. That figure is now 38%, although the percentage of business owners who purchase directly has also risen slightly to 57%, while 7% of those surveyed use both brokers and direct sources for differing needs.
On a more positive note, of those who do use a broker, 88% of respondents reported that they were satisfied (68%) or somewhat satisfied (20%) with the level of service received.
The golden opportunities?
SME business owners’ lack of knowledge of the type of insurance they really need to cover the risks they most fear represents a huge broker opportunity. Although 39% of business owners surveyed claimed to be knowledgeable about business insurance, other statistics from the Index paint a very different picture.
The Index reveals that the threat of being unable to trade; of equipment failure and breakdown; and cybercrime are amongst business owners’ chief concerns. Yet 80% of respondents who rank being unable to trade as a chief concern do not believe they have business interruption insurance.
There is a golden opportunity for brokers to be trusted advisers for SMEs.
Similarly, 80% of respondents who are concerned about equipment breakdown do not believe they are covered for it; while only 9% of business owners who worry they may fall victim of cybercrime are confident they have cyber insurance.
The opportunities for brokers are clear, says Anthony Pagano, Vero’s National Manager – Commercial Intermediaries.
“There is a risk gap – SME owners have major fears about the business failing, yet they are confused about how well they are covered by their insurance,” he said.
“This research shows that small business owners are looking for help in not only making sure they are adequately insured, but in running their businesses. This is a golden opportunity for brokers to be trusted advisers for SMEs.”
Attracting and retaining clients
The survey again highlighted the importance for brokers to have a strong, mobile-friendly online presence. It recommended brokers making strong use of positive client testimonials in their online communications, given the increasing importance consumers place on peer reviews as part of their purchasing decisions.
The need to effectively communicate with clients, in ways and at times suited to their individual preferences, was also a key finding. While most business owners are happy to receive a number of email and phone communications from their brokers over the course of the year, an occasional face-to-face meeting is still important to two thirds of those surveyed.
Beyond that, many SME owners state that they are also looking to be kept informed of emerging risks that may be influencing the price of cover, and impacting their area of business; as well as looking to their brokers for advice on risk mitigation measures. In short: the broker needs to assume a more proactive stance to ensure client satisfaction.
NIBA CEO Dallas Booth said that the report findings are relevant to all brokers who operate in the SME space. “The Vero SME Insurance Index is an extremely valuable tool, and we highly recommend brokers study it carefully and look at how they can implement the findings into their businesses,” he said.
“The days when brokers could get away with simply contacting their clients once a year at renewal time are gone. 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.”
His views were echoed by Vero’s Anthony Pagano, who added: “Brokers have a role to play as advisers to their clients – they are not just an insurance distribution channel.
“This matters because trusted adviser relationships are more loyal, more profitable and, ultimately, more rewarding for all involved.”
The days when brokers could get away with simply contacting their clients once a year at renewal time are gone.
Key findings and action points
Brokers are ideally placed to become the adviser of choice for risk-conscious SMEs
Key action points: Clients are worried about costs. Converse with them about the price and value of their insurance and proactively provide facts and reassurance to reduce the level of their concern. Become a trusted source of advice, not just on insurance, but on risk management in general.
There is a gap between SMEs’ business concerns and their insurance coverage perceptions
Key action points: Help clients to really understand what they’re covered for. Link the importance of particular types of insurance cover – such as business interruption, machinery/equipment breakdown and cyber – to their business concerns. This offers a great opportunity to up-sell these under-utilised covers.
Highly satisfied clients tend to have more proactive brokers
Key action points: Be proactive, find out how often and how the client likes to be communicated with, and provide them with more than just basic information. Don’t be that broker that only contacts the client at renewals time.
Lack of clarity around the broker’s role in claims is impacting client satisfaction
Key action points: If you do manage claims on behalf of clients, make sure your clients know that. Explain how the claims process works and demonstrate the value of the broker role within that. Keep clients updated on the progress of claims.
Wide-ranging online strategies are needed by brokers to attract new clients and build on existing relationships
Key action points: Make sure your online presence meets potential clients’ expectations. You will need professional website design, which should be responsive to all mobile devices. Content should have a strong emphasis search engine optimisation and keywords (e.g. ‘Insurance Broker Adelaide’). Ask satisfied customers to provide written testimonials which you can use and share online.
You can access the full 2016 Vero SME Insurance Index at www.bit.ly/2016VeroSMEindex