Brokers urged to rethink strategy in face of digital disruption - Vero SME Insurance Index 2017

Thursday, 23 March, 2017

Online channels are having a significant impact on the way that Australian small businesses buy insurance, with those using brokers declining, according to the latest Vero SME Insurance Index.

“There’s never been a more important time to explain to SMEs the value that brokers can bring to their businesses,” said Mr Anthony Pagano, Head of Commercial Intermediaries at Suncorp.

“Digital disruption is firmly here and brokerages - as well as the broader industry -  need to develop strategies to adapt to this new reality, which has seen broker usage declining.

"2017 is shaping up as a year of challenges for the insurance industry,” Mr Pagano said.

"However, with change comes opportunity and the brokers who can understand the risks, develop appropriate strategies and embrace the prospect of change, will be those who will seize these opportunities and thrive in years to come.”

 

More than 1500 small business owners were surveyed nationally in October 2016 for the Vero SME Insurance Index. For the sixth Index, the findings are being released in four tranches over 2017. The first issue of the Index’s findings focusses on the general market landscape, including SME’s usage of brokers and who they receive their insurance advice from.

The survey found a decreasing proportion of SMEs bought their insurance policy through a broker, from 40% in 2013 to 31% in 2016.

At the same time, the numbers of SMEs who bought their last insurance policy online increased from 20% in 2013 to 27% in the latest survey.

“Online channels are having a significant impact on the way that Australian small businesses buy insurance, with over one in four businesses buying online,” said Mr Pagano.

“There is no silver bullet solution, but current best practice suggests brokers who develop pro-active strategies to engage with disruption will be the ones best equipped to grow and thrive in the modern era.”

 

Mr Pagano said there were two key routes for brokerages to consider: embrace and integrate digital capabilities; and reinforce the unique benefits they bring to customers

The Index also looked at who SMEs sought insurance advice from.

The vast majority of SMEs turn to some sort of professional adviser, such as accountants, lawyers, business advisers and industry bodies, as well as insurance brokers and insurance companies. In the latest index, 79% of SMEs claimed to seek guidance from professionals - down from 84% in 2015.

However, the number of SMEs who say they get at least some advice from peers, such as friends, family, colleagues and other business owners increased from 46% in 2015 to 52%.

“It’s concerning that a growing number of SME are seeking advice from peers only, meaning that they are making complex insurance and risk management decisions with no trained, professional input to guide them,” Mr Pagano said.

“The good news is that broker clients who get advice from their broker are significantly more satisfied than those who don’t and are more likely to see greater benefits of working with a broker," he said.

 

“Advice can be a valuable way of demonstrating expertise and, to be most effective, needs to be tailored to suit the clients’ size and needs.

“Brokers could consider a more collaborative approach to delivering advice to some clients, so that these SMEs feel more involved in the process,” said Mr Pagano.

 

Click the below image to download the report

 

NB Throughout 2017 Vero will release further findings centred around the following themes:

 

For further information contact:

 

Rob White
External Relations Manager
Commercial Insurance
Suncorp Group
Ph. +61 2 8121 0467
Mob. 0411 881 887
rob.white@suncorp.com.au

 

Michael Mills
External Relations Adviser
Commercial Insurance
Suncorp Group
Ph. +61 2 8121 0492
Mob. 0405 805 489
michael.mills@suncorp.com.au