Broker usage among small businesses has risen during the COVID-19 pandemic, the 10th anniversary edition of Vero’s SME Index reveals.

The report, released today, shows that one in five surveyed businesses don’t feel confident about their business prospects – double the number from last year – with economic downturn topping owners’ concerns.

But 40% of SMEs say they purchased their last policy through a broker, up from 35% in 2020, and more than half of direct buyers are considering using a broker in future.

Vero says these figures suggest “a potential reversal of the declining trend seen in previous years” and that falling business confidence gives brokers an opportunity to add value.

“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,” Vero Head of Commercial Intermediaries Anthony Pagano told insuranceNEWS.com.au.

“It’s almost like a flight to trust. I can’t stress enough that insurance is a complex product. Brokers add that real value in simplifying the complexity and trying to demystify what it means for you and your personal circumstances. I think that has happened more than has happened in the past.”

There is still work to do, however.

This year’s report highlights that increasing numbers of SMEs see insurance as a grudge purchase (82%) and are wary of the industry (73%).

The most satisfied clients are those who have a “collaborative relationship” with their broker. Some 51% of this group are “highly satisfied”, compared with just 24% of those who have minimal broker interaction.

On pricing, 49% of respondents expect a 5-10% increase in premiums, with 12% predicting 11-20% and 6% fearing a 21% rise or more. About 33% didn’t know.

Most (54%) thought COVID was the reason for premium increases, with just 21% putting it down to claims from large natural catastrophes.

The report says brokers must explain the impact such events have on premiums, and should actively discuss the hard market.

“Discussing pricing can feel uncomfortable, however, many SMEs are keen to know more about why premiums increase,” it says.

Most respondents (54%) have not reduced insurance cover during the last six months, but 10% admit to making large reductions and the report says it’s critical for brokers to make clients aware of the risks of underinsurance.

The nationwide survey targeted 1500 business owners and insurance decision makers, and a series of in-depth interviews was also carried out.