High-street SMEs have to evolve Brokers need to get under the skin of their clients’ business activities to ensure they have the right cover in place THE TRADITIONAL high street is changing and the needs of SME businesses are continually evolving as a result, according to insurer Zurich. In servicing SME clients, brokers need to place greater emphasis on getting under the skin of their clients’ business activities to ensure they are placing the right cover. As a result of widespread change, many high-street small businesses are diversifying their offering in order to keep afloat – and they may not fully understand the implications this can have for their insurance needs. “It’s really important that businesses evaluate the cover they need, and that brokers get a real understanding of what the customer is doing, because things are changing all the time,” Karen Dobinson, head of package underwriting at Zurich, told Insurance Business. For small businesses on the high street, key perils range from damage to premises from fire and escape of water, to the potential for customer ‘slips and trips’ amid a growing claims culture. The impact of a physical loss on a small business can extend well beyond the event itself, and many SMEs are unprepared for a claim, Dobinson warned. “People often forget that while it might be a flood or a fire that wipes out their premises, they’ve still got bills to pay – business
interruption is a key cover for any SME, but particularly those with a physical presence,” Dobinson said. Janette Brooks, portfolio analyst at Zurich, added: “Quite often, small businesses are just keen to insure the bricks and mortar around them and protect their belongings, but if the
as there are a large number of them and they have a high insurance penetration rate,” said the report. It’s crucial that brokers drive home the importance of SME insurance altogether, and get their sums insured correct, to ensure that in a worst-case scenario clients aren’t pushed out of business. In the hair and beauty sector, for example, the risks can be life-changing. A misapplied skin treatment, an allergic reaction, or a novel therapy that hasn’t been properly vetted can all lead to the loss of reputation and significant claims, and can ultimately destroy a business. As SMEs diversify to adapt to change, brokers need to take the lead in ensuring clients provide a full and accurate account of their business activities, Dobinson stressed. “That’s undoubtedly where a broker can make a huge difference,” she said. “A lot of SME businesses, especially when they are starting up, are not sophisticated – they’re not going to have risk managers, they are often one-man bands, or just have one or two people working for them, and that’s absolutely where a broker can add value by identifying customer needs and ensuring the cover meets
The impact of physical loss on a small business can extend well beyond the event itself worst-case scenario does happen and their premises are destroyed, there’s a risk of losing customers on a more permanent basis.” Yet despite this risk, the SME insurance market witnessed a sharp decline in 2016 following four years of growth, a recent study by Research and Markets has revealed. SMEs spent 22.7% less on insurance. GWP fell 9% from 2015 to £6.4bn and the report suggested that slower economic growth and uncertainty over Brexit may have stoked the decline as SMEs spent less on insurance, fewer businesses opened, and liquidations increased. The market suffered particularly from a drop in the number of companies with five to nine employees taking out cover. “The number of companies in this size category fell by 4.1%, which is considerable
those needs.” Zurich’s Shop & Salon product for SME customers accommodates a wide range of trades and activities. It can provide a complete package of covers ranging from property and business interruption to public liability, and will automatically increase stock cover for three months during peak periods such as Christmas. Brokers can access these products either through ZTrade or Acturis. When brokers place clients with Zurich on ZTrade, they also have access to valueadded services such as Reputation.com. This provides clients with an assessment to help them manage their online reputation – a useful tool in a world where many customers do research online before interacting with a company.
Specialty Brokerages 2017