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Decade of learning: four key themes from SME Index

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Vero’s annual SME Insurance Index, which delves into the minds of 1500 SME owners and their insurance-buying habits, has just published its 10th edition.

Looking back over last week’s report, and those that preceded it, uncovers important insights into how the industry has changed, and the trends that brokers need to be most aware of.

Here are four key themes, as identified by Vero.

Collaborative relationships are crucial

Most broker clients say they are satisfied with their brokers, with the figure hovering just under 70% for most of the last decade.

This year only 60% of broker clients say they are satisfied, with 32% neutral and 8% dissatisfied. But study authors believe this could be a COVID-inspired anomaly, rather than the start of a downward trend.

More importantly, there is a very strong correlation between satisfaction and the type of relationship the client and broker have.

In this year’s report, 51% of SMEs who have a collaborative relationship with their broker are highly satisfied, scoring their broker 9 or 10 out of 10. The corresponding figure in the category that has had minimal interaction with their broker is only 24%.

Highly satisfied clients also have brokers who carry out value-added tasks that demonstrate expertise, such as providing in-depth analysis and information, checking up on business changes and advocating on the client’s behalf.

SMEs are getting more involved

In the early days of the index, fewer than half of SME owners personally researched the insurance needs of their business.

Now, that figure is up to 60%, with increasing amounts of information easily accessible online, and more than 40% of respondents say they are “quite knowledgeable” about business insurance.

The report points out that these statistics are based on SME owners’ “personal interpretations”, and some might think they have more knowledge than they actually do.

But broker relationship statistics bear out the trend. In 2012 less than 10% of broker clients said they hadn’t had much to do with their broker in the last 12 months – this year that figure rose to more than 25%.

Likewise, in 2012 35% of broker clients said their broker “presents me with choices and we make decisions together” and this year the figure dropped to just over 20%.

Brokers should be aware of these attitudes “so they help their clients feel engaged”, the report says.

Service and expertise go hand-in-hand

Brokers believe that the major benefit they deliver to their clients is expertise, and with good reason.

But over the 10 years of the index “providing great service” has overtaken expertise as the most common reason clients work with their current broker.

“This indicates that service is now just as important for brokers to consider for their clients, as expertise,” the report says.

Concerningly, increasing numbers of people are turning to family, friends, colleagues or peers for advice – 39% of respondents took this approach in 2016 but the figure rose to 54% by 2019.

“Brokers, and the insurance industry in general, should consider educating SMEs on the complexity of insurance and the need to get professional advice, rather than taking a ‘DIY’ approach or relying on the informal advice from personal networks,” the report says.

Brokers play a key role in claims

The report backs up the view that brokers play a vital role in claims, with broker client satisfaction with the claims experience rising, and direct buyers’ satisfaction in this area falling.

In this year’s report, 72% of broker clients reported claims satisfaction, compared with just 37% of direct buyers.

The level of broker involvement in a claim varies, with 45% of broker client claimants saying their broker managed most of the process, 48% saying the broker gave advice but the SME owner managed most of the process, and 7% reporting their broker was not involved at all.

“When brokers are part of the claims process, satisfaction tends to be considerably higher and the claims process is seen as being less complex,” the report says.

“This indicates that when brokers are involved in the claim it can help improve the process substantially for SMEs.”

Click here for the full report.