Insurance brokers have proven their value against the challenging backdrop of COVID-19, showcasing their expertise and relevance. This was reflected in Vero’s latest report, which found that 84% of small and medium enterprises (SMEs) scored their brokers 8 out of 10, up from 67% from their score in 2018.
However, the COVID-19 pandemic forced SMEs to change their business or ways of working to remain viable amid an uncertain environment - and even though many SMEs made some changes, some chose to renew their insurance without a broker’s help, potentially leaving those SMEs open to increased risk, according to the Vero 2022 SME Insurance Index.
Now in its 11th year, Vero’s index surveyed 1,500 SMEs to understand the current business climate, insurance purchasing behaviour, and the views of brokers and the insurance industry. For the first time, it included insights from 100 larger businesses (which have over 200 employees) to uncover how they differ from SMEs and how brokers can meet their distinctive needs.
Of 52% of SMEs that reported renewing their insurance without brokers’ advice, 14% reviewed coverages on their own, while 38% renewed their insurance as is. One concern was that younger SMEs were even less likely to receive their broker’s advice when renewing their insurance.
The latest figures are concerning when considering the 2021 SME Insurance Index, which showed that 40% of SMEs purchased their last policy through a broker, up from 35% in 2020. Additionally, more than half of direct buyers were considering using a broker in the future, continuing an increasing trend over the last few years.
“Although broker satisfaction levels are at a four-year high, which reinforces the role and advocacy that a broker plays within the current environment, there remain many opportunities for brokers to take advantage of,” said Anthony Pagano, head of commercial intermediaries at Vero.
“Having a deep understanding of the insureds’ business operations, processes, and ways of working throughout the year provides brokers the ability to connect with their clients through the supply of information and advice to mitigate or eliminate emerging risks and finding cost-effective ways to protect their business.”
The index advised insurance brokers to consider engaging their clients – particularly younger SMEs and medium businesses –ahead of renewal time to ensure they understand the potential consequences and benefits of regular insurance reviews and risk advice. It also emphasised that brokers must ask SMEs about any changes to their business, undertake risk assessments, and be proactive in recommending improvements before renewing insurance.
“The more brokers can deliver on these tasks which currently have the biggest performance gaps, the more likely SMEs will value and keep engaging with their broker,” Pagano said. “The industry has undergone significant changes in recent times to ensure the insured’s best interest is front of mind. The pandemic has presented SMEs with many challenges, be it through the simple survival of ongoing trade or for those in segments who have thrived, to understand the implications a changing business model can have on their insurance exposures.”
With many variable factors to consider, Pagano warned that brokers who simply rely on clients to contact them regarding any business changes might find themselves in a situation down the track, which could have been easily avoided through early detection and discussion with clients to provide a solution or options to consider.
