In an increasingly difficult market Vero’s latest SME Index finds brokers achieving high satisfaction scores from their clients, with direct buyers moving across as well

By Wendy Pugh

The feedback for brokers in the latest annual survey of insurance buyers is encouraging: satisfaction levels are high, trust levels are holding and indicators tracking direct versus intermediary trends appear to be moving their way.

It could easily not have been the case, given the 12th edition of the Vero SME Insurance Index surveyed firms after record Queensland and northern NSW floods, a slew of other catastrophes, pressures from supply chain delays and rising inflation and interest rates.

The index shows the percentage of businesses purchasing cover through both direct and intermediary channels continues to increase, but not at the expense of brokers. And a rising number of respondents are considering using their services in future.

Vero Head of Intermediaries Anthony Pagano says the overall findings are a positive reinforcement of efforts made by brokers following a tough couple of years, and it is excellent to see that satisfaction largely held at high levels.

“We know mixed usage is here to stay, but there appears to be some signs there that non-users are increasingly considering broker usage,” he says. “I believe that brokers are increasing the level of awareness about [their] trusted risk and insurance adviser role.”

The report finds 78% of broker clients are satisfied with the service they have received. The percentage remains well above pre-pandemic levels, while easing from an unexpected surge to 84% amid covid uncertainties.

Broker satisfaction by business size

On claims outcomes, there’s a 20-percentage-point satisfaction gap in favour of intermediated buyers relative to those purchasing direct. The gap is wider for complex policies, such as professional indemnity, and narrows to par for commercial motor vehicle.

The index shows a quarter of SME businesses don’t use a broker for any of their insurance, 61% are mixed users who buy between 1-90% of their insurance through a broker, and 14% are heavy broker users.

% of policies bought through a broker

The mixed channel percentage has risen from 54% in the previous year, with the shift coming from a reduction in the percentage of non-users. Some 62% of direct buyers say they’d consider using a broker in future – up from 50% – while price is increasingly cited as a reason direct buyers give for not using a broker.

The importance of reinforcing brokers’ reputation as trusted advisers and demonstrating the value they add remains a central message from the report, which surveyed 1500 SMEs and 250 large businesses.

The survey finds that 48% of respondents agree that “recent events have made them more wary of the insurance industry”, up from 41% a year earlier.

But attitudinal trends around brokers held steady and are more positive relative to insurers, where there was a small increase in negative sentiment.

That mistrust hasn’t risen significantly in the wake of three years of natural disasters and other headwinds is notable, the report says. The results suggest the industry as a whole, and brokers in particular, have been successful in maintaining trust despite high numbers of claims and challenging conditions

Attitudinal trends about trust

“Trust comes in many forms,” Mr Pagano tells Insurance News. “It comes with the ability of the broker to connect and resonate with their clients’ concerns, and find solutions for their clients, and also to show a level of care and desire to truly understand their clients’ business operations.”

Survey responses highlight that many SME businesses are doing it tough, and there’s a critical role for brokers to ensure clients don’t take ill-considered cost-cutting shortcuts on insurance, or simply fail to take it into account.

Some 61% of SME business are worrying about economic issues. Two-thirds are experiencing major or moderate inflation impacts and more than half have been affected by supply cost increases.

Many are looking at changes over the next year, some due to the economic concerns. But 41% of the Vero SME Index participants admit insurance is the last thing they consider when making adjustments or taking fresh directions.

A previous survey found many policies are renewed without expert advice and are often rolled over “as is”. This year 33% of respondents said they don’t take anything significant into account when renewing.

“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 says.

“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 [made changes] in this inflationary time may find their cover no longer sufficient.”

Clients with distant relationships, who have had little broker contact in the past 12 months, are more likely not to take any new elements into account when renewing, compared to those who have more collaborative relationships.

Mr Pagano says brokers can also encourage clients to think about insurance implications before making changes, potentially reducing future exposures costs, and further demonstrating the value they bring in ensuring businesses are effectively covered for risks.

Partial payouts are the most common reason to be dissatisfied after a claim, highlighting the importance of reviewing coverage amounts at renewal time and ensuring clients understand what’s included.

This year businesses were also asked to rate the complexity of insurance tasks. Some 60% nominated understanding policy wording details and 50% highlighted difficulties in claim paperwork and knowing what risks aren’t currently covered.

Knowing what is insurable, the coverage amounts needed, understanding business interruption and legislation changes also proved problematic.

The report notes all nominated areas were rated as complex by at least 45% of respondents, suggesting most insurance areas are far from simple for businesses.

Mr Pagano says this year’s report overall is encouraging for brokers, while driving home ways they can show their value to clients, moving beyond transactional support roles and assisting firms, particularly as key decisions are made in tough times.

“The current environment is tumultuous, but presents a clear opportunity for brokers to shine by demonstrating their expertise, professionalism, and ability to deliver value to businesses as they deal with challenging conditions,” Mr Pagano says.