Brokers seen as key to recovery
Vero Insurance’s new risk tool designed to help brokers help SMEs
Understanding and managing risk is a key factor as New Zealand’s small-to-medium enterprises (SMEs) look to build financial resilience after the effects of Covid-19.
That’s one of the key findings of the latest Vero Insurance SME Index — leading Vero to launch a new Risk Profiler resource on their website, a tool designed to help brokers assist clients to do so.
Catherine Bateman, Vero’s Executive Manager, Brand & Customer Engagement, says the research uncovered that SMEs really want support in mitigating risk within their business.
“Events like natural disasters and the pandemic have shown the need to be financially resilient and insurance is part of that – but they need to know what they’re covered for and what they’re not, and what adjustments they can make to their businesses to reduce risks.”
The Risk Profiler moves sector by sector through different industries — including retail, engineering, manufacturing, accommodation and tradies — looking at the typical risks that can apply to each. It also profiles the risks themselves (fire, electrical and water damage, for example) as a resource for brokers.
“Vero’s Risk Profiler supports and guides the conversations that brokers and SMEs could be having about business risk and the options to reduce or mitigate things that might cause disruption to the business,” says Bateman, adding that the tool contains resources including checklists and claims data.
New Zealand’s 480,000 SMEs provide employment for roughly a third of all Kiwis and represent about 29 per cent of our GDP; 97 per cent of all New Zealand businesses have 20 employees or fewer. Vero’s SME Index annually surveys the wants and needs of this vital sector of the economy.
After Covid-19 jolted businesses around the country, the index showed that 85 per cent of SMEs had experienced a decline in revenue following the initial Government lockdown, with 53 per cent reporting revenues have shrunk by half or more.
While Vero had seen few examples of businesses cancelling policies, the research showed that around 79 per cent of SMEs were making changes to their business because of the effects of Covid-19.
Bateman says a changing business could mean a changing risk profile, so now is the perfect time for brokers and SMEs to use the new Risk Profiler tool to conduct a fresh risk analysis of activities and assets within their business.
“Many small business owners are just too busy to focus on such things and often it’s a question of ‘you don’t know what you don’t know’ for them. One of the biggest drivers in using a broker is the advice and expertise they receive — sometimes revealing cover they didn’t know they needed or a different way of doing things.”
Bateman says the focus on putting brokers and SMEs together comes from previous research findings showing that brokers who provide risk profiling and management services are 72 per cent more likely to win the trust of SMEs.
There is an inherent advantage, Bateman says, in SMEs using brokers: “One of the things that really came through from this year’s index is that business owners really, really value independent information in identifying risk.”
The Vero SME Index showed that 57 per cent of SMEs buy their insurance through a broker with 29 per cent going direct to an insurance company; Vero was keen to see the use of brokers increase.
“There’s a risk for customers going direct — they may not have considered a lot of things they should have,” she says, “and that can put them at risk.”
The other advantage of Vero’s Risk Profiler is that it could help customers avoid some of the typical risks altogether.
“That’s the key in any insurance. Yes, your cover will help you recover financially, but it is far preferable never to have to use it. It’s like insuring your car — it’s covered against a crash but the inconvenience and disruption to your life means you still don’t want to crash, so you drive carefully.”
The Risk Profiler also uses Vero’s experience from claims over the years. For example, 50 per cent of all claims from tradies involve theft of their tools, meaning they can mitigate or avoid risk by certain practices. Accommodation businesses, on the other hand, most commonly claim for water damage — and there is plenty that can be done to give them the best chance of avoiding that.
Meanwhile, Vero has up to $10 million hardship funds available for SME customers to access to help them through the Covid crisis — mostly through premium waivers and discounts. Vero is also encouraging customers to reach out to their brokers if they needed financial assistance.