Vero’s annual SME Insurance Index provides valuable insights into the challenges Australian businesses face every day, how they work with brokers, and their perceptions of insurance.

This year, for the first time, the 1750 businesses were also quizzed on the potential threats they face and how prepared they are to handle them if they eventuate.

Here are the key talking points.

The economy is only one of many increasing concerns

A sentiment that clearly shines through this year’s report is that of concern, with respondents increasingly worried about a wide range of factors impacting their businesses. While in 2023, the economy was 61% of respondents’ primary worry, this year 66% of businesses identify the economy and employee/health as equally key areas of concern.

Concern levels increased across other areas, too. Market concerns rose from 52% to 57%, political/geopolitical concerns rose from 46% to 52%, and environmental concerns rose from 27% to 30%.^[1]

Those concern levels fluctuate based on business size. For example, 95% of businesses with 200-499 employees had employee/health concerns, while 63% of businesses with 500+ employees had environmental concerns.^[2]

Within concerns about employees and health, 26% of businesses are concerned about their employees or their own mental health (up from 23%), while 16% are finding it difficult to attract and retain good quality staff (up from 15%) and 23% identified health and safety risks (up from 22%).^[3]

When it comes to economic concerns, meanwhile, inflation is unsurprisingly the big worry, with 35% of businesses – up from 27% last year – citing inflation as the biggest economic challenge.^[4]

However, when it comes to business performance, there was some encouragement, with 41% of businesses seeing an increase in turnover, compared to 38% in 2023.^[5]

The economy is prompting businesses to make changes to their insurance

Reviewing your insurance coverage annually is smart business practice, regardless of the economic circumstances. However, challenging times often prompt businesses to analyse all expenses, including insurance.

Of those surveyed, 51% had made changes to their business insurance over the past 12 months, up from 47% in 2023.

Of the changes made, 11% had increased their excess, presumably to reduce premium costs, while 10% had reduced sums insured or turnover.

Ten per cent of businesses, meanwhile, had increased their cover or sums insured, potentially reflecting the rising costs of replacement goods and value of stock and assets. This is set to continue this year, with 29% of businesses considering increasing cover or sums insured, and 27% considering increasing their excess.^[6]

Businesses are increasingly seeing the value of insurance

The perception of insurance has increased significantly since before the pandemic, with 82% of businesses in 2024 agreeing that ‘insurance gives me peace of mind’ – up from 67% in 2019 and 2020.

Simultaneously, trust in insurance companies has increased, too. While in 2019, 43% of respondents agreed with the statement ‘at the end of the day, you can’t trust insurance companies’, in 2024, that figure stands at 34%.^[7]

Satisfaction with brokers is at an all-time high

The role of an insurance broker and the value they can offer businesses is increasingly appreciated, with 87% of businesses satisfied with the service they receive from their broker and just 5% not satisfied. This shows a marked change from 2021, when 60% of respondents were satisfied and 12% not satisfied.^[8]

Service levels (82%), expertise (81%), faster claims resolution (51%), time-saving (38%) and cheaper prices (32%) were all reasons businesses choose to use a broker.^[9]

Collaboration is key to getting the best out of broker relationship

The 2024 Index revealed a growing ‘partnership’ approach to the broker-client relationship. The provision of in-depth information and analysis about the options available to businesses was valued by 65% of those surveyed, while the ability to assess the risk profile and make appropriate recommendations was identified by 63%. Recommendations around risk reduction and mitigation were valued by 62%.^[10]

The value of a collaborative broker relationship was illustrated by 30% of respondents making decisions together, after being presented with choices by the broker. Of this 30%, 93% were satisfied with their broker, compared to the average 87%.^[11]

Risk threat demonstrates importance of business interruption cover

Businesses were asked to rate how likely it was their business could be impacted by a range of risks. Responses illustrate that businesses are realistic about the risks they face. For example, 67% believed they would be impacted by a cyber attack, 60% believed employee fraud was likely, while 67% identified equipment breakdown as a key risk, and 54% cited stock deterioration or damage.^[12]

Take up of business interruption, machinery breakdown and cyber insurance is relatively low, however, which illustrates a need for businesses to consider how they’re protecting themselves against such risks.^[13]

This may be explained, however, with high levels of confidence about dealing with those risks. For example, 90% believe they are prepared to deal with stock deterioration or damage, and 83% are prepared for equipment breakdown. A cyber attack is something 80% of respondents believe they are set up to handle, while 79% are confident in dealing with the inability to trade for a long period of time.

Seventy nine percent, meanwhile, are confident the business is prepared for natural disasters.^[14]

The importance of talking to your broker

While businesses rated themselves highly on their ability to deal with potential threats, less than half had discussed risks with their brokers. In fact, 16% of those surveyed had not discussed any listed risks with their advisor.

The most common risk to discuss with a broker was cyber. However, only 44% of businesses had had this conversation with their broker. And, while 79% of businesses felt they were well set up to cope with the impact of natural disasters, only 29% had involved a broker in that conversation.

In summary

The 2024 Index shows that while businesses are seeing increasing value in working with insurance brokers, there are still a host of opportunities for brokers to add significant value around risk identification and mitigation.

With business concerns increasing, it’s important that businesses have the right insurance coverage in place, and risks that could have a major detrimental impact on a business aren’t being overlooked.

^[1] Vero SME Insurance Index Report 2024, p6

^[2] Vero SME Insurance Index Report 2024, p7

^[3] Vero SME Insurance Index Report 2024, p7

^[4] Vero SME Insurance Index Report 2024, p9

^[5] Vero SME Insurance Index Report 2024, p9

^[6] Vero SME Insurance Index Report 2024, p10

^[7] Vero SME Insurance Index Report 2024, p14

^[8] Vero SME Insurance Index Report 2024, p22

^[9] Vero SME Insurance Index Report 2024, p23

^[10] Vero SME Insurance Index Report 2024, p24

^[11] Vero SME Insurance Index Report 2024, p25

^[12] Vero SME Insurance Index Report 2024, p37

^[13] Vero SME Insurance Index Report 2024, p37

^[14] Vero SME Insurance Index Report 2024, p38