NIBA examines ‘important messages’ from SME study

The National Insurance Brokers Association (NIBA) will examine Vero SME Insurance Index results that show declining trust levels and more businesses buying some cover in the direct market. The survey results also highlight opportunities for brokers to be more proactive as advisers, with only 14% of respondents saying they undertake a risk analysis when prompted by an adviser such as a broker or accountant. “The report has a number of important messages for brokers, and we are giving very careful consideration to these and to what we might do in response to the report,” NIBA CEO Dallas Booth told The index shows the Hayne royal commission has had an impact, with 47% of SME respondents saying recent events make them more wary of the insurance industry, up from 36% who agreed with the proposition last year. About 33% agree that “at the end of the day, you can’t trust insurance brokers”, which compares with 16% in 2013, while for insurance companies the response jumps to 43% from 35%. The results show 36% of respondents used a broker for their last insurance policy purchase, little changed from 37% last year. The level has stabilised in a 34-38% range for five years after dropping from 44% in 2014. But the percentage of businesses using both the direct market and brokers to buy insurance has surged, led by SME leaders aged under 40. About 60% buy 1-89% of their insurance through a broker, classifying them as mixed users, compared with 42% a year earlier. For those aged under 40, data shows 78% are mixed users, 13% don’t use brokers and 10% are heavy broker users. Vero Head of Commercial Intermediaries Anthony Pagano says the survey suggests policy complexities are being overlooked by some SMEs, with 75% of respondents saying evaluating the insurance needs of their business is easy. “Without broker expertise these ‘too easy’ SMEs are at significant risk of being underinsured or having inappropriate insurance for their needs,” he said. “Those who know insurance understand how intricate it can be. “Interestingly, only 39% say they find it easy to understand policy wording, which further shows they might be putting themselves at risk.” 

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