Brokers are becoming more proactive in assisting clients and satisfaction measures are rising, but levels of mistrust have also increased, the annual Vero SME Insurance Index says.

The latest survey finds 70% of clients are satisfied with their broker, up from 66% a year earlier, while 22% were neutral and 8% dissatisfied.

An increasing number of respondents say brokers are providing in-depth information and analysis on options, and are assessing risk profiles and recommending changes that could be made to a business.

“The research indicates that SMEs’ satisfaction with their brokers is at an all-time high, which is a positive development for our industry,” Vero Head of Commercial Intermediaries Anthony Pagano said.

Nevertheless, trust in brokers has deteriorated following a sharp decline last year, as legislative change is discussed and regulatory scrutiny ramped up following Hayne royal commission recommendations.

Some 38% of respondents agreed that “at the end of the day you can’t trust insurance brokers” compared with 33% last year and 16% the year before.

In the case of insurers, the mistrust level eased to 42% from 43%, but was still up from 35% two years ago.

“With all the regulatory focus at the moment we are living in a very low-trust environment,” Mr Pagano told insuranceNEWs.com.au. “What we really need to do is respond to that by being open and transparent.”

Mr Pagano says there has been a significant change in the way brokers engage with clients in recent years as they move beyond more traditional transactional arrangements.

The hardening insurance market has required greater clarity and explanation around the factors driving rising premiums and has opened the way for brokers to provide guidance on reducing risk.

Mr Pagano says taking the time to explain premium increases and providing increased transparency around commissions and remuneration is important in building trust with clients.

“Client SMEs understand that brokers are SMEs themselves, and they understand that they need to earn an income to run a business,” he said.

The survey for the first time asks SMEs if they have discussed how their broker is remunerated and if they’d like to know more.

Only 14% said commission rates were discussed, while 70% were very or somewhat interested in knowing the commission rates their broker receives.

The percentage of respondents who used a broker for their last purchase remained stable at 35% from 36% last year, while the number of SMEs who get all or most of their insurance through a broker rose to 27% from 16%.

The number of direct buyers who said they would consider using a broker in the future rose to 48% from 41% last year and just 34% two years ago.

Looking ahead, weaker economic conditions are posing headwinds that could affect client demand for brokered insurance cover.

The survey shows many SMEs experienced low growth last year and may look at cutting costs by reducing insurance cover, pushing for better deals or changing the way they buy policies.

“Reducing insurance cover can be a big risk for SMEs, which is why brokers need to be alert to their clients’ situation and provide them with support through the various lifecycles of their business,” Mr Pagano said.