Only 10% of Australian businesses buy most of their insurance through a broker, down from 27% in 2018, according to Vero’s 14th SME Insurance Index.

Vero notes a significant shift towards using a mix of channels. Direct purchase is becoming more common for straightforward products including commercial motor, workers’ compensation and travel insurance. 

The index, released today, shows 74% of SMEs use a broker for some but not all covers.

Vero head of distribution Anthony Pagano says businesses want to work with brokers on a tailored basis.

“This year we saw a need for brokers to educate clients on the risks of underinsurance and the importance of robust risk management practices, especially with high adoption rates of emerging technology,” he said.

“With significant economic pressures and rapidly advancing technologies, businesses are looking to insurers for comprehensive coverage and strategic support to manage complex and evolving risks.

“Brokers are essential in this role, with their expertise integral to ensuring clients have a broad view of their risks to guide them to make informed decisions.”

The index is based on a survey of 1750 SMEs across Australia.

Key reasons given for working with a broker are expert knowledge and advice (88%), great service (82%) and assistance in claims (48%).

However, client satisfaction with brokers dropped to 69% from a record high of 87% a year earlier.

“While this number is a significant drop, 69% satisfaction is still a very strong score that compares favourably with satisfaction levels before 2022,” Vero said.  

The number of businesses that rate their broker five or below out of 10 is stable at 5%, and a higher proportion of six or seven ratings “demonstrates an increase in those who are neutral rather than dissatisfied”.

The decline in satisfaction is largely driven by microbusinesses of one to four employees, while satisfaction remains “very high” among larger businesses.

The survey shows 90% of businesses lack a formal risk management process, and 81% never or rarely conduct risk analysis. Less than half review their sums insured annually (42%). Businesses using a broker are more likely to do so (63%).  

Mr Pagano says effective risk management has never been more essential, and brokers play a crucial role.

“When business owners and operators are faced with so many decisions, they can be overwhelmed by the weight of it all, which can lead to inaction.

“As economic pressures, technological advancements and emerging global challenges reshape the landscape, businesses are increasingly looking to the insurance industry not just for coverage, but for strategic support in managing complex and evolving risks.

“Insurance brokers are at the forefront of this shift.” 

See the report here.