Economic concerns influence business insurance decisions for SMEs

The 2023 Vero SME Insurance Index report has revealed that 47% of businesses surveyed are making changes to their business insurance as a result of economic concerns. See the report and webinar for details.  

The recently released 2023 Vero SME Insurance Index report has revealed that 47% of 1,750 Australian businesses surveyed are making changes to their business insurance as a result of economic concerns.  

The report outlines that economic pressures combined with price perceptions of brokers could see Australian businesses making decisions about their insurance in a bid to curb expenses, that could ultimately cost them more.  

The independent research commissioned by Vero, also highlighted the following findings: 

• Client satisfaction with brokers remains remarkably high
  After a huge uptick in 2022, broker satisfaction remained high at 78%, which was reflected across all business sizes from micro to large sized businesses. 

• Direct buyers increasingly considering using a broker
  62% of respondents said that they would consider using a broker, a significant increase from 50% in 2022, while direct users saying they would not consider using a broker down from 27% to 20%.   

• Broker clients had greater satisfaction with their claims experience 
  This year 68% of broker clients who made a claim say that they were satisfied with the experience, compared to only 48% of direct clients, which is a similar result to last year.

• Risk of underinsurance
  Many businesses may be at risk of underinsurance without adequate broker engagement. 61% of businesses are planning changes to their business in the next year, but 41% admit insurance is the last thing they consider when making the changes.

• Cost of engaging a broker
  Price perceptions continue to hinder direct buyers making the switch, with more than one third (36%) believing it would be more expensive to go through a broker – up from 25% in 2019.

The value of a broker has never been more important  

Vero’s Head of Distribution, Anthony Pagano said the report reinforced that the value of broker expertise has never been more important, but it is critical brokers engage with their clients to be seen as a trusted insurance and risk advisor, not another cost to be managed.   

“The report clearly shows that Australian Businesses are looking for ways to manage the pressure of the economic conditions. But making uninformed decisions about their insurance, or even making changes to their business without thinking about the insurance implications, may put themselves at risk,” Mr Pagano said.   

“The research has shown what we already know – that this is a huge opportunity for brokers to demonstrate their value through proactive engagement and offering expertise. We know times are tough, and small businesses may find themselves without the coverage they believe they have, because they did not fully understand the consequential impacts or go it alone.   

“Particularly when it comes to renewals, for brokers to take the time and truly understand the business operations and aspirations of their clients and understand what if any changes need to be reflected in the policy. It’s staggering to learn that almost a third of clients aren’t considering any changes at renewal time, when we know most of them will have made some changes and/or be exposed to emerging insurable risks and even those who haven’t in this inflationary time may find their cover no longer sufficient.”  

For full details on the research findings, refer to the 2023 Vero SME Insurance Index Report and supporting webinar