SME Underinsurance & Uncertainty High
More than half of business insurance customers don't have the right cover. Almost a quarter say they would lose their business in the case of an expensive event or legal claim, according to recent report into small and medium sized businesses from QBE.
62% of businesses are unlikely to have the right insurance
Levels of uncertainty and underinsurance are high: 62% of respondents believed they were unlikely to have the right insurance, 60% admitted they had little to no understanding of liability insurance within the context of their business risks, and 52% were uncertain about different types of insurance.
Only 14% of business owners turn to brokers for advice
An important insight for brokers from this report is that despite this high level of risk, not many business owners are seeking advice from brokers on their business risk and finances - just 14%. Over half (51%) turn to their accountants or financial advisors for advice, 40% do their own research (such as online) and a whopping 42% turn to family, friends and colleagues for insurance advice.
Brokers have an important education role
The stats from this report clearly show us as brokers and advisors that there is lots of potential in our role for educating and informing existing and potential business insurance customers of the value of working with a broker and the importance of ensuring the right level of cover to prevent them losing their business. It's not just about pushing sales - it's about informing with helpful facts and scenarios to ensure business owners can make the best decisions on insurance and risk management. Liability risks are a particularly important area to raise awareness about due to their potentially financially devastating results. The top ten most expensive insurance claims for small businesses are for injury to labour hire personnel, injury to third-party workers, electrocution, fire, and defamation and slander, being trapped by machinery or equipment, physical assault injury, faulty products, slips and falls, and injuries through impact by an object. The highest claiming industry sectors are roofing services, plumbing, laundries and drycleaners, automotive repairs and services, and auto fuel retailing.
Brokers can collaborate and inform decision-shapers
The stats showing how business insurance customers research their insurance options show lots of potential to collaborate with and target the decision-shapers in the chain such as accountants and friends and families through online content and direct advice. When asked how they would pay for a claim if an incident happened, 42% of SMEs said they would use an insurance policy, 27% said they would go into their savings, 18% said they didn't know and 15% said they wouldn't be able to afford the legal costs.
Memorise helpful stats for conversations with customers
The stats from this report are a very useful tool for brokers to keep in their tool kit when talking to customers; giving concrete stats on risks and tendencies add credibility to conversations both in person, by email and online. The role of brokers is an important one in the Australian business landscape when it comes to educating SMEs on risk and preventing them from going bankrupt or failing as businesses when the worst happens. The report: SMEs and Insurance: A Pulse Check On Risk Trends For Business, surveyed more than 600 SMEs and draws on five years of QBE claims data analysis. Read the full report here.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Andy Jamieson.