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Liberty Specialty Markets

SMEs seek brokers' aid as sales plunge

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Many businesses in New Zealand are seeking insurance advice from brokers as revenues take a hit from the coronavirus pandemic and owners make widespread operational changes, a survey by Vero reveals.

Close to two-thirds of SME businesses sought advice on how their policy might respond at times like this, the latest Vero SME Index finds, as 85% experienced a decline in revenue following COVID-19, with just over half reporting their revenues halved or worse.

Only 12% said there has been no impact on sales.

Vero says 57% of SMEs buy insurance through a broker most or all of the time, while 29% buy all their insurance directly. Executive GM Mark Wilkshire says Vero would like to see more SMEs taking advantage of broker expertise to help them with decision-making around their business insurance.

“We’re in an unprecedented situation and many SMEs are looking for assistance, but a third don’t access the advice and support that a broker could provide,” he said.

Mr Wiltshire says this the ideal time for SMEs to use a broker to get the right advice across a range of topics, including financial support options that might be available to them.

Vero has allocated a $10 million hardship fund for its SME customers to help them through the COVID crisis, and is planning a suite of risk management tools to help brokers and SMEs work together to understand a risk profiles.

The insurer says the tools will be issued soon.

The survey says risk advice is a growing area of focus at small businesses after the sweeping changes brought about by COVID-19.

“SMEs are really looking for support, not just on keeping a tight rein on the value and cost of their insurance, but on understanding what changes they could make to minimise the risk to their businesses, outside of insurance,” Mr Wilkshire said.

The survey finds 79% of New Zealand businesses are making changes such as reducing costs, working remotely, reducing staff hours or temporarily closing the business, updating their online presence, making changes at the business to align with new customer needs and altering marketing activity.

Some 5% of SMEs have had stood staff down, while 1% had made staff redundant.

Those changes “all have an impact on the risk profile of a business and there is considerable scope for SMEs to connect with insurance brokers for support with risk analysis and insurance decision-making,” Mr Wilkshire said.

The survey finds 80% of SMEs think it is important for brokers to assess their risk profile and recommend insurance cover accordingly, while a quarter of direct insurance buyers find difficulty in understanding the risks facing their business.

It says SMEs want to know what other types of insurance would benefit their business and how to defer or adjust insurance premium payments.