“Do-it-yourself” owners of small businesses increasingly investigate their own insurance needs, leaving brokers potentially vulnerable, according to this year’s Vero SME Insurance Index.

Clients who have used brokers for fewer than three years – and 37% of them are aged under 40 – give strong insights into changing attitudes and the future of the industry.

The report says these newer users are highly involved in the insurance process, with 56% using the internet to research options before purchase.

About 53% say cost is their most important concern, and 40% believe buying online is a great way to get the best price.

Worryingly for brokers, the DIY trend is not only prevalent among younger people but also the core client base.

The report surveyed 1500 small businesses and found 44% of SMEs use a broker, down from 50% last year.

The decline is driven primarily by men and the over-40s – traditionally brokers’ strongest users.

These “late adopters” are embracing new ways of working that are already established by their younger peers, the report says.

“As technology becomes more mainstream, and even the late adopters embrace the internet, the landscape is changing for all industries, including broking. This means that even brokers’ traditional audiences are becoming more likely to buy their insurance direct as they become more comfortable with different ways of doing business.”

Price is not only a concern for the new generation of broker clients: 54% of respondents report premiums have risen over the past year, with just 9% saying they have paid less.

About 60% expect prices to rise over the next year, while just 4% predict a fall.

However, such views are “at odds with insurance industry reality”, the report says.

“The past year has been notable for the sharp change in pricing direction, with extensive price discounting and premium reductions having an impact on revenue across the industry.

“Clearly there is a gap between insurance customers’ perceptions and reality, and this story of slowing price growth is yet to be noticed by business owners and decision-makers.”

The report isn’t all bad news for brokers.

Many direct customers are open to the idea of using a broker in future, with 35% considering it. Most (60%) would use online searches to find a broker.

Even the price misconception can work in intermediaries’ favour, with 41% of direct clients saying they will switch to a broker if they can get cheaper deals.

Brokers also have strong reputations to build on – 91% of clients say they are satisfied or somewhat satisfied.

So what should brokers be doing?

Crucially, they need to invest in a strong online presence and mobile channels, to hook both the new generation and late adopters.

Search engine optimisation can also help target new business as direct customers scour the internet for brokers.

The report says more analysis and explanation should be passed on to clients so they feel more involved.

And it is important to highlight the benefits brokers bring, including much-desired expertise.

Brokers should discuss price to drive perceptions they bring better value, and be prepared to deal with requests for discounts.

It is also important to point out explicitly when premiums have been reduced.

While the vast majority of current clients are happy with their brokers, many would like to have more contact – 63% prefer to hear from their broker at least twice a year.

There can be little doubt that digital advances are enabling the DIY culture of SME ownership to grow.

Vero says brokers must ensure they work ever more closely with clients, involving them in ways they would not previously have considered.

It’s either that, or independent customers might go their own way – and never come back.