- Fifty-seven (57%) of Australian small and medium businesses are not completely covered for their business risks, according to insurer Vero.
- The summer trading period may make these underinsurance gaps more acute for small businesses.
- Brokers can embrace technology to efficiently address and manage their SME clients’ underinsurance risks ahead of the end-of-year break.
For many small businesses, the ‘silly season’ is the busiest time of year. However, increased summer trading may, in turn, increase key exposures, leaving many potentially underinsured.
“Underinsurance is a year-round issue for small businesses, but summer trading can make these coverage gaps more serious,” says Jane Mason, Head of Intermediate Business at leading insurtech platform BizCover for Brokers. “It’s essential that brokers are able to help SMEs identify and address areas where they do not have adequate cover.”
Brokers are key to fighting underinsurance
A 2022 survey by Vero (a BizCover for Brokers insurer partner) found that 57% of the small and medium businesses surveyed were only “mostly covered” or “partially covered” for risks. Of those, over one-third (34%) admitted they had no plan if their business experienced an adverse event.
However, brokers can play an essential part in the battle against underinsurance. The Vero survey also found that 52% of SMEs who purchase insurance through a broker responded that they are completely covered for insurable risks compared to just 39% of direct buyers.
These stats point to the vital roles that broker education and advice play in helping SMEs avoid underinsurance. Bringing awareness to common causes of underinsurance—including identifying risks and understanding different types of insurance—can help close the gap by breaking down a topic that is normally perceived as complex.
Increased Christmas trading risks
Summer trading is not business as usual for many small businesses. Brokers are urged to reach out to SME clients in retail, hospitality, beauty, and other key industries to ensure that clients have the right cover and that their policies can handle the November to February rush.
“There are areas where end-of-year trading may prompt policy adjustments,” says Mason. “Contents cover is a prime example—businesses may store more stock in the lead up to Christmas and their policy should be reviewed to ensure they are adequately covered for the increase in stock.”
She continues, “Businesses outside of retail might also want to check that they have appropriate cover and adequate limits to handle summer trading—like cafes, restaurants, and salons.”
Business Interruption cover may also need to be reviewed to ensure adequate protection during peak trading periods. An unplanned closure during the busiest time of the year might impact a business’ ability to survive future trading downturns.
“Brokers might also use peak trading seasons as an opportunity to add new policies to a client’s insurance portfolio, like Cyber Liability,” says Mason.
While cyberattacks can happen at any time, summer may be especially inconvenient. A cyberattack or breach can bring operations to a standstill, costing SMEs far more than they realise in lost profits and productivity.
The 24-hour incident response services provided by most Cyber Liability policies are crucial for small business owners. They can help insured businesses contain the damage from a cyberattack and restore their operations as quickly as possible.
Using technology to your advantage
Insurance may be the last thing on an SME’s mind during the silly season and starting the underinsurance conversation early may be advisable. Brokers can also utilise technology alongside their expertise to ensure their clients are adequately protected fast and with minimal effort for both parties.
Brokers using the BizCover for Brokers (B4B) platform can compare competitive business insurance quotes from seven leading insurers and for multiple products from single data entry, saving them the time and effort of filling out multiple long proposal forms and chasing down individual insurers.
“The B4B platform is designed to streamline the binding process for brokers who embrace technology,” says Mason. “Instant quotes and binding are game changers for addressing SME underinsurance risks in the lead up to the end of year break and all year long.”
*BizCover for Brokers act as agent of the insurer and not as the agent of you or your client. The opinions expressed by BizCover for Brokers contributors are their own, not those of BizCover for Brokers. Any advice provided is general only and does not take into account the personal objectives, financial situation or needs of you or your client. Always read the Product Disclosure Statement or Policy Wording (available on our website).
© Copyright 2023 BizCover Pty Limited. BizCover for Brokers is a business name of BizCover Pty Ltd (ABN 68 127 707 975; AFSL 501769).
