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BIBA research reveals the importance of advice to SMEs during the recession

The importance of advice to SME's during the recession

BIBA research reveals the importance of advice to SMEs during the recession

New research from the British Insurance Brokers’ Association (BIBA) has identified the benefits to small businesses of insurance advice – and the difference that this can make, especially during a recession.

It is clear there is confusion among SME about insurance advice. The tightening of the economy is going to lead to more buyers focusing solely on price and it is worrying to think these firms could end up with inadequate because they do not understand the difference between advice from a broker and a single product sale from other suppliers.

BIBA is concerned that at a time when SMEs are looking to reduce costs and focus their efforts on customer retention, they may lose out by failing to take proper advice on what is the most appropriate cover.

The research reveals confusion among small businesses about what constitutes advice and where they should go to get it. A third of SMEs who purchased through non-broker channels thought they received advice when it is likely they did not.

Key findings

Insurance advice is valued by SMEs:

Advice is highly valued with 96% of SMEs who used a broker stating that advice was important
94% of those using an insurance broker felt the broker provided reassurance that they have the right cover in place
89% felt using a broker allowed them to focus on their business
85% felt using an insurance broker ensures they always have a competitive premium
81% that say that their broker identifies a suitable secure insurance policy and explains why it is appropriate for me with specialist advice

However, there is confusion about what advice is and where to obtain it:

There is a lack of understanding amongst SME business owners of what constitutes advice; 33% of SMEs not using a broker to arrange their business insurance did not understand that they weren't receiving advice and were probably only being offered a single product.
In spite of the apparent confusion, advice is highly valued with 96% of SMEs who used a broker stating that advice was important.
Amongst both those who use a broker and those who do not, there is confusion as to where they can obtain advice; 63% of SMEs who did not use brokers said they received the service of identifying a suitable secure insurance policy and specialist advice when it is likely that a good proportion of them were mistaken..

Eric Galbraith, BIBA’s chief executive, said: “It is clear there is confusion among SME about insurance advice. The tightening of the economy is going to lead to more buyers focusing solely on price and it is worrying to think these firms could end up with inadequate because they do not understand the difference between advice from a broker and a single product sale from other suppliers.”

BIBA is urging businesses to ask more questions of their insurance supplier before they buy or to speak to their broker who can provide advice and a suitable policy.

Question to establish if advice is being given:

1. Are you recommending this policy to me?
2. Is this policy suitable for me?

If either of these two questions are answered ‘Yes’ then advice has been given.

Or, the SME could simply ask ‘is this an advised sale?’

Learn more about BIBA and the work they do... click here to expand

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