SME price index hits new high
Despite this high level, the overall pricing via the BizCover platform remains in the same range of +/- 11%, the same range as at the start of the index in 2012.
“This tight price range is the result of a number of factors balancing out,” said Simon Schwarz (pictured), chief financial officer of BizCover.
BizCover describes its Insurance Price Index as Australia’s largest online marketplace for SME insurance among the broadest range of insurance companies, commercial insurance products and professional categories.
Read more: Increase in premiums in the latest price index
Schwarz said there have been steady increases in the price of some insurance offerings in the trades sector for a number of years and in the retail sector since COVID.
“However, these have been offset to some extent by a steady decline over the past few years in the price of liability insurance for the distribution industry and a generally flat pricing of liability insurance for the industry. trades and professional liability insurance for professionals. sector. This despite fluctuations or increases in individual quarters, including the most recent. ”
He said COVID has had a significant impact on the insurance rates of SMEs in the retail sector.
“The retail index declined steadily from the second quarter of fiscal year 17 until the onset of COVID in Australia in March 2020, from which the retail index rose again over six quarters to reach its levels of exercise 17, “he said. “This is due to the significant increases in the price of the content section of commercial packs for the retail sector. “
In the last quarter, the price of business interruption insurance for the retail sector rose to its highest level since the index began.
“The price of the content section of commercial packs for the trades sector has also increased significantly since COVID in Australia from March 2020. However, this was offset by a flat rate pricing for liability insurance for this sector. during this period. The result is that the overall price of SME insurance for the craft sector has only increased slightly over this period, ”said Schwarz.
He added that feedback from SMB clients shows that many are looking to cut costs on expenses such as their business insurance.
At the same time, insurance brokers may find it difficult to make their small SME clients ‘profitable’ for them, given the time and effort it takes for brokers to transact through procurement processes. traditional. The amount of brokerage commissions earned on small premium transactions is often offset by the time and effort required to complete those transactions, ”he said.
Schwarz said brokers can play a vital role for SMEs that need advice and advocacy, and for those that want to keep costs down.
Read more: SMEs offer a “significant opportunity” to brokers
“Brokers should look to streamline their SME books by using online platforms that can reduce the time spent on listing and binding for their SME clients and make them more profitable,” he said.
He added that some platforms allow brokers to obtain and link quotes for clients in minutes from a range of leading insurers.
“This allows brokers to focus on the most valuable advisory and defense services that their SMB clients cannot obtain through direct online channels. Thus, they can retain their customers while reducing the time and effort wasted in traditional sourcing processes which typically make small premium transactions unprofitable for the broker, ”said Schwarz.