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Tough times result in swing towards brokers: Vero SME Index

Broker satisfaction levels remain high and there may be a shift toward seeking the advice of intermediaries amid difficult economic conditions, the latest Vero SME Insurance Index shows.

Some 78% of clients are satisfied with their broker, with the percentage holding well above pre-pandemic levels of 66% in 2019, while easing from a covid-attributed spike to 84% in the previous survey.

The annual survey shows 61% of respondents use a mix of channels to purchase insurance, up from 54% a year earlier, with the increase driven by a reduction in those who bought entirely through direct channels. The percentage of “heavy broker users” held steady.

Some 62% of direct buyers said they would consider using a broker in the future, up from 50% last year and 41% in 2019.

The findings shows that 68% of broker clients are satisfied with their claims experiences, a 20 percentage point higher result compared to those who buy their insurance direct.

“We know mixed usage is here to stay, but there appears to be some signs there that non-users are increasingly considering broker usage,” Vero Head of Distribution Anthony Pagano says.

“In an uncertain and challenging environment, it’s understandable that clients might be looking for additional support with these important business decisions.”

Mr Pagano says the survey highlights the pressures that broker clients are under, with 61% of respondents nominating economic concerns as a worry. Two thirds of businesses reported that they are experiencing major or moderate impacts from inflation and over half are being impacted by supply cost increases.

The survey finds that 61% of businesses are planning changes in the next year, but 41% admit insurance is the last thing they consider when making changes.

Trust in brokers held stable amid a period that has included record flooding and repeated natural catastrophes, as well as economic volatility. The survey finding 31% of SMEs agree with the statement that “at the end of the day, you can’t trust insurance brokers”, consistent with the previous year.

The level of respondents who agreed that you can’t trust insurance companies increased to 37% from 33%, while 48% agreed that recent events have made them more wary of the industry, up from 41% previously.

The Vero SME Insurance Index report is based on research involving owners and insurance decision makers at 1500 SMEs and 250 large businesses, covering a range of enterprise types and locations. The survey is conducted by BrandMatters.

Vero will provide further updates from the index over coming months covering Environmental, Social and Governance (ESG) issues, natural disasters and employee concerns.