Less than one-third of SMEs bought insurance through a broker last year as digital upheaval affected demand for professional services, according to a Vero survey.

The SME Insurance Index shows 31% of respondents used a broker to buy cover, down from 40% in 2013, while online purchases increased to 27% from 20% over the same period.

“Digital disruption is firmly here and brokerages, as well as the broader industry, need to develop strategies to adapt to this new reality, which has seen broker usage declining,” Vero Head of Commercial Intermediaries Anthony Pagano said.

The report shows 38% of micro-businesses – with 1-4 people – used brokers, down from 49% in 2013, while at the other end of the SME spectrum 43% of medium-sized businesses used brokers compared with 59% three years earlier.

“While we can’t accurately predict future trends, it is a concern that even some of the larger medium-sized businesses do not appear to have brokers at top of mind and are potentially not understanding the role brokers play in this segment,” Mr Pagano told insuranceNEWS.com.au.

The report suggests two key strategies for brokers to consider: embrace and integrate digital capabilities, and reinforce the unique benefits they bring to customers.

“There is a clear need for the wider broker community to consistently communicate the benefits that brokers deliver to clients,” Mr Pagano said.

“Brokers need to continually interact and engage with their clients, particularly in the medium to large end, demonstrating risk management solutions by reducing, mitigating or eliminating business risk.”

Vero notes the statistics may make grim reading for brokers, but the issues are part of trends affecting many, if not all, sectors of the economy.

The report cites a recent study from Deloitte showing 65% of the Australian economy is likely to experience a significant impact from digital disruption, with professional services and financial services among the most affected areas.

More than 1500 small business owners were surveyed last October for the annual index. The findings will be released in four tranches this year.

Later reports will examine what drives and motivates business owners, changing attitudes of female SME owners and a broader look at how the sector uses financial services.

See ANALYSIS.