Providing guidance on complex emerging technologies such as artificial intelligence could be a “powerful demonstration of the value brokers bring as risk experts”, according to Vero.  

As businesses increasingly embrace the use of AI, electric vehicles, lithium-ion batteries and solar panels, new and complex risks emerge, it says.

Brokers can demonstrate risk expertise by providing proactive advice and prompting clients about insurance and the importance of AI frameworks.

“There is opportunity for more brokers to offer this advice,” Vero’s 14th SME Insurance Index report says.

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

It finds many businesses are using emerging energy technology, yet few are discussing the risks with their brokers and many are “unaware of their own levels of usage”.

“As energy technology and usage evolves, brokers have an opportunity to demonstrate expertise by sharing information and educating businesses about the potential risk implications of these technologies,” Vero says.

Brokers may need to be proactive, because many businesses “may lack the knowledge to understand that they need advice as it relates to insurance”.

About one-quarter of businesses say they use new energy technologies, including 11% using lithium-ion batteries, 10% using EVs and 8% using solar panels with battery storage; 57% of businesses are not sure whether they use these technologies.

“There is a real opportunity for brokers to help businesses as their risk profiles change. In particular ... lithium-ion batteries and EVs. Helping businesses understand the specifics of these technologies could be very valuable,” the report says. “There is room for education about these technologies and their potential risks.”

The survey found many businesses have not discussed the risks or insurance implications of these technologies with their brokers. EV owners are least likely to have done so.  

“Larger businesses are more likely to have had conversations about these technologies with their broker, suggesting that small and medium business clients are most in need of proactive engagement from their broker,” Vero says.

The survey also found only 18% of SMEs have a comprehensive AI framework focused on risk management.

Data privacy and security are the biggest considerations for businesses when implementing AI, and Vero says the risk to business reputation and lack of consumer trust on data security is a concern. Combined with changing legislative requirements and technological capabilities, this provides scope for brokers to provide expert guidance.

“There is clearly still work to be done in this space, and brokers can play a valuable role in advising clients on the need for AI frameworks as part of their risk management strategy,” Vero says. “There is likely to be an increase in related claims ... There is a need for education about what can go wrong.”