‘The trend is our friend’

Opportunities abound as business awareness of brokers’ true value grows

By Bernice Han

An annual Vero survey of SME insurance buyers provides many positives for brokers, which have at times feared being pushed out by the rise of online comparators and chatbots masquerading as risk advisers.

Client satisfaction is at an all-time high as SMEs say their brokers are giving them the advice and support they need, the survey finds. At the same time, the proportion of businesses that say insurance provides peace of mind continues to grow, and levels of mistrust are falling.

While businesses are struggling with rising costs, the majority do not plan to cancel their insurance. Most businesses want their broker to assess their risk profile and provide mitigation advice that will help reduce insurance costs.

The findings from the latest SME Insurance Index appear to be a vindication of the work put in by brokers to demonstrate the value they bring and why they are better risk advisers than bots and comparison sites.

Vero Head of Distribution Anthony Pagano says brokers continue to play a critical role helping businesses reduce risk and protect their assets.

“The trend is our friend at the moment. There are plenty of positive trends happening our way,” Mr Pagano tells Insurance News.

He says risk mitigation is “highly relevant” for businesses, with recent years throwing up one challenge after another. The fallout from covid-19 is still reverberating as the economy grapples with labour and material shortages, causing inflation to run rampant.

Mr Pagano says the insurance industry could have become a target of distrust in such difficult times. However, the sentiment among customers towards insurance providers, particularly brokers, appears to reflect the industry’s value.

“This is where a broker can step in and make a difference to those clients … that are unlikely to have specialist in-house risk expertise,” Mr Pagano tells Insurance News. He says insurance is “far from simple” and a broker’s role is to “make the complex simple”.

“I do feel that brokers have now made their mark. They are not just insurance advisers but risk advisers as well.”

In this 13th edition of the SME Insurance Index, Vero surveyed 1500 SMEs and 250 large businesses across Australia about their attitudes, needs and behaviours towards insurance and brokers.

Client satisfaction is at a record high, with about 87% of broker customers giving their risk adviser a score of at least eight out of 10, up from 78% last year and the previous record of 84% in 2022.

“I do feel that brokers have now made their mark. They are not just insurance advisers but risk advisers as well.”

Vero, which says the result is “gratifying”, analysed the factors that have the strongest influence on client sentiment.

The survey finds 82% of advised clients cite good service as a reason to use a broker, up from 76% in 2021. Expertise is another area clients value, with 81% listing it as a factor in engaging a broker, up from 75% in 2021.

The highest increase centres on claims, with 51% saying claims are a reason to use a broker, a significant lift from 34% in 2021.

Brokers are not just giving insurance advice. About 62% of respondents say their broker offers recommendations on ways to reduce risk and 61% say they get updates on regulatory and insurance requirements from their broker.

“All reasons to use a broker have increased, suggesting brokers are delivering valuable outcomes across a range of areas, and providing a potential explanation for the increases in satisfaction,” Vero says.

Businesses want their brokers to keep in regular contact, especially when they have a claim, according to the survey. Among those who are satisfied with their broker, 74% also expressed satisfaction with their most recent claims experience.

Vero says claims data shows the importance of collaborative relationships. About 86% of clients that work collaboratively with their broker are satisfied with their claims experience, compared with only 55% that have limited interaction with their broker.

“This supports findings from previous years, that what businesses want most from claims is clear communication on process, because this clarity is only possible in collaborative relationships.”

One survey respondent, an electronics manufacturer, says its broker was involved in the claim process from start to finish after a fire caused by a lithium battery destroyed its factory. The experience left the business more aware than ever of the need for a risk adviser with good communications skills.

“Everything came through as it should. The broker was all over the claim and following up in the background for us,” a spokesperson for the manufacturer tells Insurance News.

“Our broker made sure the claim process moved as fast as it could have. The whole process was seamless. Our relationship with our broker has obviously evolved since the fire. We definitely are more understanding and appreciative of his role and the importance it plays in our business.”

For the first time since the index was launched, businesses were asked to choose their approach to insurance. About 76% say they try to insure every risk where possible, while only 6% insure the bare minimum.

There has been a marked increase in businesses saying insurance gives them peace of mind, up from 67% in 2019 to 82% this year. At the same time, about 34% now say they do not trust insurance companies, down from 43% in 2019.

Businesses were asked if they are thinking of changing their insurance in the next 12 months because of economic challenges, and 83% answered yes. Vero says this underlines the importance of open communication between brokers and clients.

Insurance is top of mind for many, the survey finds. The past decade has brought a significant rise in the proportion of respondents that agree “recent events have made me question my cover”, from 23% in 2014 to 40% this year.

In other key findings, more than 70% of businesses want their broker to inform them of emerging risks; they want their risk profile assessed and follow-up policy recommendations; they want advice on ways to reduce threats; and guidance on the risks facing their industry.

Mr Pagano says the message for brokers is clear. “Make sure you understand your client’s business … every broker needs to really do that and the only way you can do that is by engaging with your customers,” he tells Insurance News.

“Don’t just rely on the information they have provided, don’t just rely on their websites, don’t just go with what they have historically taken out in their insurance program.

“Brokers should be on site, they should be conducting appointments, have in-depth conversations, whether verbally or in writing.”