There are many ways for brokers to get to grips with the challenges facing their SME clients. Perhaps the most direct way is to actually walk in their shoes by being a small business themselves.
For 25 years, Australian businesses have been putting their trust in Insurance Advisernet, one of the country’s largest general insurance groups. Its network of advisers in Australia has grown over that time to more than 180 practices – each one well equipped to understand the needs of their customers, many of whom are SMEs. In New Zealand, Insurance Advisernet’s business is just on 15 years old and boasts more than 70 practices across the North and South islands.
“Our advice practices mirror their clients in many ways,” says Shaun Standfield, Insurance Advisernet’s managing director for Australia and New Zealand. “They have gone out on their own, with our support, and taken the risk to develop their own asset and business. In a way, this reflects many of our clients, who also are small to medium busi-nesses that have backed themselves to build a business for themselves.”
This firsthand understanding of the issues clients are facing has undoubtedly contrib-uted not just to the network’s growth, but also to its current 95% customer satisfaction score. This, in turn, means strong referrals from existing customers, plus regular calls from potential clients.
Of course, few businesses were immune to the impact of COVID-19 – Insurance Advisernet’s advisers and clients included. While Standfield says the financial impact of the pandemic on IA’s business wasn’t nearly as bad as predicted, some practices and many clients in the hospitality, tourism, and enter-tainment sectors took a heavy hit. Social and physical isolation only added to the stress.
“Isolation did impact people’s wellbeing,” Standfield says. “We implemented many initiatives to keep people connected through the pandemic, such as IA wellness programs and regular updates on the business via Microsoft Teams meetings. We also encouraged as many team members as possible to join local Teams meetings and participate in the many webi-nars we ran during the year.”
The pandemic has underscored the impor-tance of having a local adviser – someone who will pick up the phone when a business needs help, rather than a call centre. This experience, combined with an existing model that supports advisers, means Insurance Advisernet is well positioned to help SME clients navigate the post-COVID-19 era, Standfield says.
“Our model allows our practices to concen-trate on their clients with the support struc-tures we provide in terms of systems, compli-ance, professional development, finance, business management tools, insurance place-ment and claims advocacy services.”
As for core principles, it’s business as usual, with advice, choice and value at the fore. “We don’t lead with a price-driven model,” Standfield says. “We believe advice is the key to ensuring our clients are insured correctly by a trusted professional with relevant industry qualifications, access to broad insurance options and value for money.”
Standfield is buoyant about the future of broking in Australia and says the authorised representative model is empowering advisers to flourish. Supported by sound back-o ce systems, ARs can focus all their energy on their own business and helping their clients achieve fi nancial growth and freedom.
“I also believe the continued invest-ment in data, systems, marketing and compliance infrastructure is crucial for the continued growth of both the AR’s business and for longevity of the AR licensee holder,” Standfield says.
His optimism for the future of broking isn’t just wishful thinking – it’s backed up by the data. He points to the latest statistics from the Australian Financial Complaints Authority (AFCA) for the last six months of 2020.
“During that period, there were 7,131 complaints lodged about general insurance; of those, only 180 matters, or 2.5%, were against insurance intermediaries,” he says. “This speaks volumes for the role insurance inter-mediaries play in providing risk management advice and claims advocacy service to clients.”
Ironically, the one place where Standfield believes ARs and brokers could improve is in communicating to potential clients how great their service is.
“We need to collectively improve our messaging about our role in providing personal risk management advice against direct insurance companies that o er only general advice,” he says.
He points to recent AFCA fi ndings that it’s “not the insurer’s job to advise on the sum insured”. The statement came after a complainant’s underinsured business was destroyed by bushfi res last summer. AFCA found that the onus was on the policyholder – whose destroyed property comprised both her business and her home – to ensure she had adequate coverage.
“This is a great example of the messaging the broking industry needs to communicate more to explain why having a broker in your corner will assist you to have the right policies, and to have a claims advocate working with you if the need arises,” Standfield says.
He adds that the importance of an adviser’s role is also borne out by the recent Vero SME Insurance Index, which showed an upswing in the number of businesses seeking the services of a broker.
“Every business is unique, and a one-size-fits-all approach doesn’t work,” Standfield says. “I believe businesses are increasingly likely to seek professional advice for their insurance programs – after all, the business owner is an expert in their profession and FEATURES38 www.insurancebusinessonline.com.au– whose destroyed property comprised both her business and her home – to ensure she had adequate coverage. “This is a great example of the messaging the broking industry needs to communicate more to explain why having a broker in your corner will assist you to have the right policies, and to have a claims advocate working with you if the need arises,” Standfield says.He adds that the importance of an adviser’s role is also borne out by the recent Vero SME Insurance Index, which showed an upswing in the number of businesses seeking the services of a broker. “Every business is unique, and a one-size-fits-all approach doesn’t work,” Standfield says. “I believe businesses are increasingly likely to seek professional advice for their insurance programs – after all, the business owner is an expert in their profession and realises the ‘onus as a policyholder’ isn’t some-thing they can a ord to get wrong.”
The broker’s role has clearly evolved in recent years – thanks in part to technology, which allows advisers to spend more time with their clients. At its core, however, a broker’s purpose remains what it always was: to o er good advice. 
“Our role is more and more to provide risk management advice to our clients, and part of this is to craft a bespoke insur-ance program,” Standfield says. “Often, this program will be crafted using a myriad of insurance partners. At IA, we have access to over 100 insurance partners.
“Technology cannot replace the advice a person can give; good advice only comes from understanding your client’s wants, needs, and risk tolerances, and using data to ensure your clients are aware of the natural hazard risks they face, coupled with the risks associated with the industry they are in.”
Given the hard market, it’s also important for brokers to provide clients with the facts underpinning the rise in insurance premiums – from diving investment markets and rising repair costs to the increased severity and frequency of weather-related events – all of which will assist in planning for increased insurance costs.
“Also, our role as a trusted adviser is to ensure, where possible, that adequate covers are bought to protect our clients in the event they have a claim,” Standfi eld says. “Trust me – the price paid for an insurance program is forgotten when a claim occurs!”
All of this must be built on a solid founda-tion of qualifi cations, he adds. “You don’t visit a doctor who hasn’t got a medical qualifi ca-tion; why should we be able to give advice and receive remuneration if we haven’t also got an industry-recognised qualifi cation? At IA, all our principals and Tier 1 advisers must have a minimum of a Diploma in Insurance Broking.
In 2019, the Hayne royal commission issued 15 recommendations that could bring insur-ance in line with the more heavily regulated areas of financial services – including the possibility that commissions could be limited or even banned outright. While this clearly presents a challenge, Standfield sees full remuneration disclosure as the way to address any perceived confl icts of interest.
“The last thing we all want to see is consumers not seeking advice due to the upfront cost of the advice, as has occurred in the fi nancial planning industry, where only people that can a ord advice are seeking it now,” he says. “This is an unintended outcome that can be mitigated against through proper full and transparent disclosure of broking remuneration.
“You only have to look at the AFCA statis-tics for general insurance to see the posi-tive impact brokers have in protecting their clients to prevent needless complaints and frustrations and further eroding of consumer confi dence in the insurance industry.”
