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Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

'Get cover updated': Vero warning after COVID reshapes SMEs

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About two thirds of Australian SMEs have altered their business models as result of COVID-19, but just one third of these have made changes to their insurance, research released by Vero reveals.

The Suncorp-owned insurer surveyed 1500 businesses and found increasing numbers are changing their model, product or service offerings, or are moving to remote or online operations. Many are considering further alterations.

Vero Head of Commercial Intermediaries Anthony Pagano told insuranceNEWS.com.au that brokers should start by understanding the impact on a client’s business, which could be positive or negative.

“There are some states doing it tougher than others, some segments doing it tougher than others,” he said.

“Some businesses have adapted, some have diversified, some have pulled back. How many have set up a new website, or initiated click and collect, or hybrid working for employees?

“These are simple things that we now accept as the new normal. But have brokers and clients thought about how that impacts insurance cover?

“It’s not all negative, there are people growing their businesses. But the opportunity for brokers is to really think, how do I protect this business?”

While business owners have been proactive in changing models to suit pandemic conditions, Mr Pagano says the research shows many are lagging behind when it comes to adjusting their insurance.

“There is a risk that many SMEs are under or inappropriately insured as a result of the changes they’ve made and have not considered the material implications to their insurance program or business.”

More than 80% of respondents say they will keep all or some of the changes they’ve made. Broker clients are more likely to have increased or tweaked their insurance, while direct customers are more likely to have cancelled.

Vero says this shows the value brokers can bring “in navigating businesses through difficult times”.

When asked what SMEs are worried about, COVID-related concerns dominate the list. Some 39% of respondents rank the long-term impact of the pandemic on the economy as the highest concern.

Other significant COVID-related concerns include mental health of employees, maintaining COVID safe practices and managing vaccination status.

52% of SMEs agree that recent events have made them value their insurance more. Many are placing greater importance on cover that is relevant to pandemic conditions such as restarting after suspended operations, ongoing maintenance of equipment and covering employees who work from home.

“This suggests that COVID will clearly continue to impact the decisions SMEs will need to make over the coming year,” Mr Pagano said.

“Brokers could expand their conversations beyond just physical risks such as exposure to fire and look into insurance ramifications for issues such as remote working.”