Recent surveys warning brokers of the dangers posed by an increasing SME movement to the direct market are nothing new.

The Vero SME Insurance Index reported a drop in small and medium enterprises’ use of brokers – from 65% in 2011 to 61% last year – with business owners aged below 40, who instinctively carry out transactions on the internet, most likely to buy direct.

And a Roy Morgan survey appeared to confirm the shift, showing the greatest impact on brokers from industries such as construction and professional services more likely to find insurance themselves.

But brokers deny there has been any significant impact, saying their value has never been in doubt with clients and the future is bright.

While admitting the loss of some clients, there is a feeling that much of it is not the kind of business they really wanted, anyway.

They remain confident that, once a business reaches a certain size, a broker is not an option but a necessity, due to the complexities and high stakes involved.

However, there is no room for complacency. All recognise the need to adapt to developing technology, a growing emphasis on affordability and the way the next generation does business.

And there will be no place for brokers who are not prepared to work harder than ever for their clients.

The biggest challenge, brokers say, is to successfully communicate what they can offer to the wider public.

Adelaide-based Donnelly Insurance Brokers MD Mike Donnelly says companies such as his “will always be able to provide a valuable service others cannot”.

Direct insurers can’t match brokers’ ability to offer tailored wordings, professional advice and claims assistance, he told insuranceNEWS.com.au.

But he warns the National Insurance Brokers Association (NIBA) and cluster groups like Austbrokers, IBNA and Steadfast have a key role in informing the public “if brokers want to stop direct writers encroaching on their traditional market space”.

Midland Insurance Brokers MD Terry Lane admits he is losing policy numbers in some areas.

“The TV ads are bombarding people and, of course, they will look at the internet,” the Melbourne-based broker told insuranceNEWS.com.au.

“But we are starting to get some back already, because they don’t get the claims service. I genuinely feel people want to speak to someone they know.”

Even when policy numbers are down, income can rise due to a higher proportion of “quality clients”, he says.

Perth-based EBM Insurance Brokers MD Jeff Adams says he isn’t losing SME business to direct writers.

“We’re growing at around 7-8% this year so I don’t see how that can be the case,” he told insuranceNEWS.com.au.

He accepts fewer domestic customers are using a broker, and that there will always be some that go for the cheapest option, but “most people in business want to get the right support and advice”.

He says brokers were developing their own websites to cater for the shift to online channels.

Brisbane-based Comsure CEO Stephen Hamill has lost market share in personal lines, but says “by and large” his clientele has stayed loyal “thanks to the relationship and service given over a long period of time”.

He says brokers must be aware of non-traditional threats, like the emergence of retailers Coles and Woolworths as increasingly significant players. Mr Hamill believes brokers should be willing to provide cheaper and more basic products as the market demands.

He says cluster groups must do more to promote the benefits of brokers and the pitfalls of cutting them out.

Shortland Insurance Brokers director Andrew Ball says his experience on the NSW Central Coast does not reflect the surveys’ findings, and even younger business-owners are sticking with brokers.

“We find they are guided by what their parents did,” he says.

The trend towards online is not necessarily a bad thing for brokers, according to Cameron Research Group MD Ross Cameron.

“Our research would suggest much of the business that is going online is at the smaller end of the market and isn’t really what brokers are seeking.

“The businesses targeted by brokers are likely to stay with brokers.

“There wouldn’t be a broker in the country that isn’t keeping an eye on the growth of online channels and what it means to them but there is a long, long way to go before it has a significant impact on their business.

“The industry can accommodate both.”

Raising community awareness of the benefits of brokers is a key task for NIBA, according to CEO Dallas Booth.

Research and analysis is currently being carried out, he says.

“There is a generational change in business-owners and they buy insurance differently,” Mr Booth told insuranceNEWS.com.au. “But this is an opportunity rather than a threat.

“The value of brokers is absolutely there. In small business direct and personal lines direct, risk is not well understood and companies don’t give advice. They don’t guarantee that your cover matches your risk.

“I am more convinced than ever that there is a future role for brokers.”