Broker conversations can impact the changes that SMEs make to their insurance: The Vero COVID-19 SME Index

New research findings released by Vero today reveals nearly two-thirds of Australian Small Medium Enterprises (SMEs) have altered their business models as a result of COVID-19, yet, only around one-third of those have made changes to their business insurance.

Vero surveyed 1,500 Australian SME business owners/ decision makers to gain insight into how the pandemic has affected their business operations, insurance purchasing behaviours, and perceptions of the insurance industry.

Vero Head of Commercial Intermediaries, Anthony Pagano said brokers should work with SMEs to revise their insurance to ensure it suits the changing circumstances.

“The research suggests that most businesses are different now to early 2020, and while they may have been proactive in changing their models to suit the pandemic conditions, many are lagging behind when it comes to adjusting their insurance. There is a risk that many SMEs are under or inappropriately insured as a result of the changes they’ve made and have not considered the material implications to their insurance program or business,” he said.

“SMEs impacted by COVID are not the only customer segments brokers should touch base with. Regardless of industry or size, brokers should continue to check their clients’ situation to ensure any changes are appropriately reflected in their insurance.”

Increasingly, the changes that SMEs have made to their business look to be permanent with over 80 percent saying that they will keep either all or some of the changes they’ve made to their business, up 19 percent from this time last year. A majority (87 percent) of those who are planning to retain all the changes have talked to their broker, but only 57 percent who are planning to keep just some of the changes have been in contact.

“As we learn to live with the virus and begin a new ‘normal’, brokers should also look to the future and understand which changes their clients plan to keep and areas where they will revert,” Pagano said.

“Broker clients are more likely to have increased or tweaked their insurance, while direct is more likely to have cancelled, showing the value a broker can bring in navigating businesses through difficult times”.

Broker conversations can impact the changes that SMEs make to their insurance, with those who have been in contact with their broker far less likely to have made negative changes to their insurance, such as increasing their excess or cancelling some or all of their insurance.

“This suggests that brokers play a clear role in ensuring that SMEs make appropriate decisions about how to best reduce their insurance.”

When asked what SMEs are worried about, COVID-19-related concerns dominate the list, with the long-term impact of the pandemic on the economy ranked the highest concern at 39 percent. Other significant COVID-related concerns include mental health of employees, maintaining COVID safe practices, and managing vaccination status. “This suggests that COVID-19 will clearly continue to impact the decisions SMEs will need to make over the coming year,” Pagano added.

Many SMEs are now placing importance on insurance covers that are relevant to pandemic conditions such as restarting after suspended operations, ongoing maintenance of equipment, and covering employees who work from home.

Pagano concluded, “Brokers could expand their conversations beyond just physical risks such as exposure to fire and look into insurance ramifications for issues such as remote working.”