Direct buyers eye brokers, trust levels hold: Vero SME Index
Direct market insurance buyers are increasingly considering using brokers, while the percentage of businesses buying cover through a mix of channels has continued to grow, the latest Vero SME Insurance Index shows.
The annual survey finds 61% of surveyed business used a mix of channels, up from 54% a year earlier, with the increase driven by a reduction in those who bought entirely through direct channels. The percentage of “heavy broker users” held steady.
Some 62% of direct buyers said they would consider using a broker in the future, up from 50% last year and 41% in 2019.
Vero Head of Distribution Anthony Pagano says satisfaction and trust levels have remained high in other positive results for brokers from the survey, which is now in its twelfth year.
“I believe that brokers are increasing the level of awareness about that trusted risk and insurance adviser role that they play,” he told insuranceNEWS.com.au.
Mr Pagano says the survey highlights the pressures that clients are under, with 61% of respondents nominating economic concerns as a worry. Two thirds of businesses reported that they are experiencing major or moderate impacts from inflation and over half are being impacted by supply cost increases.
At the same time, 61% of businesses are planning changes to their business in the next year for a variety of reasons, but 41% admit insurance is the last thing they consider when doing so.
“The report clearly shows that Australian businesses are looking for ways to manage the pressure of the economic conditions,” Mr Pagano said. “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.”
Almost half of respondents said they had made some change to their insurance due to economic conditions, such as changing their excess or the frequency of premium payments.
The survey shows 78% of clients are satisfied with their broker, with the percentage remaining well above pre-pandemic levels, after an unexpected surge to 84% in the previous survey on the back of unusual conditions amid the covid disruptions.
“It’s excellent to see that the ground made in improving satisfaction last year has largely been held this year as we emerge from the pandemic. We know mixed usage is here to stay, but there appears to be some signs there that non-users are increasingly considering broker usage,” Mr Pagano says.
“In an uncertain and challenging environment, it’s understandable that clients might be looking for additional support with these important business decisions.”
The survey finds that 68% of broker clients were satisfied with their claims experience compared to 48% of direct clients.
Broker clients tend to be more satisfied with claims on more complex policies, with 85% satisfied with professional indemnity claims compared to 46% of direct clients, while differences are smaller for simpler claims such as commercial motor.
Trust in brokers remains stable amid a period that has included record flooding and repeated natural catastrophes, as well as a volatile economic environment. The survey finding 31% of SMEs agree with the statement that “at the end of the day, you can’t trust insurance brokers”, consistent with the previous year.
The level of respondents who agreed that you can’t trust insurance companies increased to 37% from 33%, while 48% agreed that recent events have made them more wary of the industry, up from 41% previously.
“Overall, these results suggest that the industry as a whole, and brokers in particular, have been successful in maintaining the trust of people despite high numbers of claims and challenging conditions,” the report says.
The Vero SME Insurance Index report is based on research involving owners and insurance decision makers at 1500 SMEs and 250 large businesses, covering a range of enterprise types and locations. The survey is conducted by BrandMatters.
