A decade of learning

A decade of learning

Vero’s latest SME Insurance Index marks the report’s 10-year milestone, and reveals key trends for brokers

By John Deex

The SME Index has been running for 10 consecutive years, and the reports provide brokers and the broader insurance community with that most precious of materials – information.

Each report surveys approximately 1500 small businesses on their insurance-buying habits, and by looking back on some 15,000 responses over the course of a decade, key trends can be identified.

Broker use is up, with 40% of respondents this year saying they used a broker for their last insurance purchase. Encouragingly, the number of direct buyers considering using a broker is also rising.

Vero stops short of calling it a trend – it would want to see at least two years of similar data first – but it's a positive sign nonetheless, as clients increasingly seek out guidance in a COVID-altered world.

SME's increasingly want to be involved in their insurance – 60% this year say they personally research the insurance needs of their business, up from below 50% when the index started.

And SMEs no longer just look for expertise from a broker; they want great service as well. Service has now overtaken expertise as the main reason to use a broker.

Relationships are crucial, and the more contact a broker has with the client, the more satisfied the clients tend to be.

Some 51% of SMEs who have a collaborative relationship with their broker are highly satisfied. The corresponding figure among those with minimal interaction is only 24%. Also, the more involved a broker gets with a claim, the happier clients are with the claims experience.

With this in mind, it should be concerning that 28% of clients in the latest survey say they haven’t had much to do with their broker in the past year, compared with just 9% in 2012.

Vero Head of Commercial Intermediaries Anthony Pagano says the industry has changed significantly over the decade.

“Who would have thought 10 years ago that four international broker groups would have joined together, Steadfast and IBNA would have joined together, and the authorised representative groups would be growing the way they are today,” he told Insurance News.

“No matter how good your understanding of your current situation is, it’s always good to reflect on where you’ve come from, what you can learn and what you can do differently.”

He says brokers have successfully diversified their services and incorporated emerging risks, and clients are seeking trusted advice.

“If you look at the whole environment – whether it be the pandemic, natural catastrophes, the globalisation of segments – clients are looking for expert advice and are turning to brokers for that. It’s almost like a flight to trust.

“We’ve also seen brokers diversify into full claims management services. We’re seeing through the data that at claims management time client satisfaction with brokers goes up and we’re seeing clients think, ‘we’ve had this terrible claim but thanks to my broker the experience has been fantastic’.”

Increasing numbers of clients see insurance as a “grudge purchase”, and Mr Pagano says one way to mitigate that is to provide extra value through regular interaction and information.

“The broker needs to interact not just about the contract, but what’s happened to the business, what’s happened from a legislation and regulation point of view,” he says.

“Clients see insurance as a grudge purchase, so how do you take that grudge away? How do we keep them getting value from something they hope to never use? By keeping them informed [and] risk-mitigating their circumstances.

“The research shows the less time you spend with your client the more dissatisfied the client will be. What’s the solution? Talk to your clients as regularly as is appropriate.

“The vast majority of brokers themselves are SMEs. Who better to know what SMEs want when it comes to service, and how they interact with suppliers and providers?”