claims and natural disasters - vero insurance
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Claims and natural disasters
30%
40%
Figure 1.1: Satisfaction with claims experience by purchase channel
Total Satis�ed
Direct buyers satis�ed
Broker clients Satis�ed
2019 2020 2021
30%
Broker clients satisfied
Direct buyers satisfied
50%
60%
70%
80%
In general, SME satisfaction with the claims process has remained stable over the past three years (see Figure 1.1).
However, broker clients are significantly more satisfied than direct buyers, indicating the increasingly valuable role that brokers play in managing claims for their clients.
The importance of brokers in the claims process
51%
47%
63%
40%
72%
37%
2 A decade of insight. Claims and natural disasters
Figure 1.2: Satisfied claim experience and broker tasks (broker clients)
Advocates on my behalf to insurance companies
75%57% 54%
42%
Supports me and my business during difficult times
A satisfactory claim experience tends to lead to more positive perceptions of brokers overall. Those who have had a good claims experience are far more likely to say that brokers are advocates and support them during difficult times (see Figure 1.2).
Satisfied with claim experience Not satisfied / have not made a claim
cost effective
3 A decade of insight. Claims and natural disasters
Figure 1.3: Satisfied claim experience and insurance attitudes
Preparedness to pay• I’m prepared to pay a bit
more to get better advice
• I’m happy to pay a bit more for better service
• I’m prepared to pay a bit more if I think I’ll have a better claims experience
• I just want my business insurance taken care of
Grudge• I have to be insured, but I don’t
get value for money out of it
• I only take out some insurance because I’m legally obligated to
• I buy the minimum cover I need
Price driven• I’m willing to forego personal
contact with a broker or insurance company if it means I can get it a bit cheaper
• Price is the most important concern when it comes to making decisions about insurance
Satisfied with claim experience Not satisfied / have not made a claim
99%
84%76%
82%
68%73%
In addition, those who are satisfied with their claims experience tend to be more positive about insurance in general – they are more willing to pay for better advice and service and are less price driven and grudging about insurance (see Figure 1.3).
4 A decade of insight. Claims and natural disasters
Considerations for brokers.
Consider how you can support your clients through the claims process as this has the potential to cement client relationships and highlight value over price.
1 In particular, consider how you can support your clients with natural disaster claims as these appear to differ from other claims, which will be explored in detail when we look at those who have experienced a natural disaster incident.
2
Dissatisfied Neutral Satisfied
Figure 1.4: Satisfaction natural disaster claim vs general claim
Satisfaction with a Natural Disaster claim
Satisfaction with a general claim
Satis�ed
Neutral
Dissatis�ed
Satis�ed
Neutral
Dissatis�ed
34% 38%28%
Satis�ed
Neutral
Dissatis�ed
Satis�ed
Neutral
Dissatis�ed
20% 51%29%
Bushfires, floods and storms are becoming an increasingly regular feature of life in Australia. Those in the insurance industry are conscious of the effect these natural disasters can have, but many small businesses may not have a detailed awareness of the critical role that insurance can play in ensuring their resilience to a disaster. This year, the Vero SME Insurance Index included new questions to explore how SMEs feel about natural disasters – what has their experience been, are they concerned, and how confident do they feel about their insurance coverage in the face of these disasters?
Interestingly, satisfaction levels for natural disaster claims are significantly lower than for general claims, both for broker clients and direct buyers (see Figure 1.4). This research doesn’t identify specific reasons for this, but possible explanations could include the emotional impact related to natural disasters, coupled with the high volume of claims during an event which can impact response times.
5 A decade of insight. Claims and natural disasters
That’s where the skill of the broker really comes into play.They know who to contact, how to contact them, how the system works.Bottle shop owner, Broker Client, 2021
6 A decade of insight. Claims and natural disasters
Economic downturn Increased costs Natural and other disasters – floods, storms, bushfires, fires
The Index has tracked how concerned businesses are about natural disasters since 2016. Despite the high level of bushfires and storms over the last year, the level of concern has remained stable with around one in five saying that natural disasters are a serious concern for their business, significantly lower than other concerns such as the risk of economic downturn (see Figure 1.5). Larger businesses and regional SMEs are more likely to be concerned.
General attitudes towards the risk of natural disasters
10%
20%
Figure 1.5: Natural disasters as significant business concern
30%
Natural and other disasters – �oods, storms, bush�res, �res
Increase in costs
Economic downturn
2017 20202016 2018 2019 2021
40%
50%
7 A decade of insight. Claims and natural disasters
A new question this year asked SMEs how much impact they think natural disasters are likely to have on the future of their business.
The majority of SMEs expect at least a moderate impact, with around a third saying they expect no impact at all. Larger businesses are more likely to expect that their business will be impacted by natural disasters (see Figure 1.6).
Around half of SMEs are confident that their business is covered for natural disasters (see Figure 1.7).
Notably, broker clients are significantly more confident that they are covered compared to direct buyers.
Strong impact Moderate impact No impact
Total
Small (5-19)
Medium (20-199)
Micro (1-4)
No impact
Moderate impact
Strong impact
13%
26%
22%
12% 54% 34%
55% 23%
51% 23%
54% 33%
Figure 1.6: Perceived business impact of natural disaster
Not confident Neutral Confident
Total
Direct buyers
Broker clients
Con�dent
Neutral
Not con�dent
20%
21%
18% 26% 56%
34% 45%
31% 49%
Figure 1.7: Confidence with natural disaster coverage
8 A decade of insight. Claims and natural disasters
Not at all informed Somewhat informed Very informed
Total
Direct buyers
Broker clients
Very informed
Somewhat informed
Not at all informed
17%
14%
21% 53% 26%
67% 19%
61% 22%
Figure 1.8: Feeling informed on natural disaster coverage
Similarly, a quarter of all SMEs feel informed about the impact that a natural disaster could have on their business, with broker clients better informed than direct buyers (see Figure 1.8).
Both findings illustrate the role that brokers can play in helping SMEs to be knowledgeable on their insurance coverage.
However, it is worth noting that around one in five broker clients do not feel informed, which suggests not all brokers discuss natural disasters with their clients.
9 A decade of insight. Claims and natural disasters
A third of broker clients say that their broker has discussed the risks and potential impact of natural disasters with them, of which a large majority found these discussions helpful. Of those who have not conversed, many would like their brokers to discuss natural disasters with them (see Figure 1.9).
Not very helpful (1-2) Neutral (3) Very helpful (4-5)
Helpfulness ratings
Very helpful
Netural
Not helpful
3% 22% 75%
Figure 1.9: Broker discussion on natural disasters (broker clients)
Yes, broker has discussed natural disasters
No, broker hasn’t discussed natural disasters
33% would like their broker to discuss with them
34%
66%
10 A decade of insight. Claims and natural disasters
Most broker clients believe that brokers have a role to play in helping them to prepare for natural disasters. This could include advising them on the right amounts and types of covers, as well as providing risk assessments and keeping them updated (see Figure 1.10).
Even those without a broker can see the value of a broker in preparing for natural disasters, with only a third of direct buyers saying that they do not believe that brokers have any role to play.
Figure 1.10: Perceived role of broker for natural disaster preparedness
40%
50%
60%
Advise me on
the right amount of coverage
I need
Broker clients
Direct buyers
Advise me on the type of policy to choose to
ensure that I have the coverage
I need
Provide me with risk
assessment information
to ensure that my
business operation is set up in a way that minimises risks from
natural disasters
Keep me updated on information
and regulations regarding risks
from natural disasters in my industry
10%
30%
20%
I don’t think a broker has any role to play in preparing my
business against potential
risks from natural disasters
Considerations for brokers.
While natural disasters are not the top-ranking concern for SMEs, they are relevant to many, particularly larger and regional businesses, however a significant number don’t feel confident or informed on this topic. This suggests that there is a need to help businesses better understand their natural disaster risks and cover.
1 Brokers have a clear role to play in helping SMEs feel informed about natural disaster risk, and conversations about these risks are appreciated and desired for many. Brokers need to ensure that they discuss natural disaster risks and help SMEs understand the role of their insurance coverage.
2 Many direct buyers see a role for brokers in natural disaster preparation, meaning that brokers could explain how they can help in providing natural disaster insurance coverage as a way of attracting new clients.
3
11 A decade of insight. Claims and natural disasters
Figure 1.11: SMEs impacted by natural disasters in the past 3 years
Yes, impacted by a natural disaster
No
16%
84%
Natural disasters
Bushfires
55%
30% 24%17% 13%
Severe storms Hailstorms Floods Cyclones
Almost one in five SMEs claim to have been impacted by a natural disaster in the last three years, with over half of these having been affected by bushfires (see Figure 1.11).
12 A decade of insight. Claims and natural disasters
SMEs impacted by natural disasters
56%43%
32% 32% 29%
A relatively large group (34%) of those impacted were dissatisfied with their natural disaster insurance experience. The main reasons for this dissatisfaction included lack of clarity and the length of the process (see Figure 1.12)
Dissatisfied Neutral Satisfied
Figure 1.12: Satisfaction with natural disaster incident
Satis�ed
Neutral
Dissatis�ed
34% 38%28%
Reasons for dissatisfaction
The claims process wasn’t
very clear
It took a long time to process
my claim
I only received a partial amount
of the claim
There was little or no
communication during the claims
process
The business was only partially
covered by insurance
13 A decade of insight. Claims and natural disasters
Most SMEs felt well informed about their natural disaster risks prior to their experience, with broker clients being significantly more likely to feel informed than direct buyers (see Figure 1.13).
The more informed a SME felt about natural disasters before the incident, the more satisfied they felt with their claims experience (see Figure 1.14).
Considerations for brokers.
Brokers can help reduce the high levels of dissatisfaction with natural disaster claims by helping SMEs understand the process and managing their expectations, as well as keeping them well-informed before an event occurs.
1
Not informed Neutral Informed
Total
Direct buyers
Broker clients
Very informed
Somewhat informed
Not at all informed
17%
20%
14% 19% 67%
21% 59%
63%20%
Figure 1.13: Feeling informed on natural disaster coverage prior to incident
Dissatisfied Neutral Satisfied
Total
Informed
Not informed
Very informed
Somewhat informed
Not at all informed
34%
23%
51% 27% 22%
27% 50%
28% 38%
Figure 1.14: Satisfaction by how informed SME felt prior to incident
14 A decade of insight. Claims and natural disasters
Real estate agent, broker client, 2021
Having a broker in your corner during a claim processmakes the entire experience so much easier. I wouldn’t want to do it without them.
15 A decade of insight. Claims and natural disasters
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Kate Sinclair
Communications & Media Manager Corporate Affairs
Mobile: +61 448 488 281Email: [email protected] Level 29, 266 George Street, Brisbane QLD 4000
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