The slowing economy will pose fresh challenges to brokers as clients seek to reduce costs, the annual Vero SME insurance Index says.

Findings from a survey taken before the summer catastrophes and the coronavirus outbreak show business turnover in the past year either declined or showed muted growth of up to 5% for most respondents, and confidence levels are mixed.

More than 60% of SMEs said they would address declining revenues by making some sort of change to insurance arrangements, mostly by reducing cover, pushing for better deals or changing the way they buy. Some 12% said they would consider buying direct.

Vero Head of Commercial Intermediaries Anthony Pagano says the findings highlight the importance of brokers understanding their clients’ situation and providing advice so SMEs don’t put their business at risk.

“A broker really has an opportunity to get clients to understand that when things are tough the last thing you want to be doing is making yourself vulnerable to a large loss by exposing your balance sheet,” he told insuranceNEWS.com.au.

Medium-sized businesses, an important clientele for brokers, are particularly likely to change their insurance purchasing behaviour.

This year’s survey shows a number of positive trends for brokers, including that they are increasingly valued by clients for the services they provide, but trust levels have deteriorated.

The annual survey finds 70% of clients are satisfied with their broker, up from 66% a year earlier.

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

Some 31% said the key reason for using a broker is because they keep them proactively updated about insurance issues. That is up from 25% last year and 21% in 2018.

But 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, as the Hayne royal commission impact continues.

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

“Trust can be influenced by many factors,” Mr Pagano said. “However, our experience tells us that one of the strongest and most consistent ways of building trust is transparency.”