Lack of communication with brokers limits insurance coverage
Small businesses, such as financial planning practices, can extract better value from their insurance broker if the two parties were to engage in better and closer conversations about the specific insurance needs of the business.
According to research conducted by Aon, many small businesses do not have a clear expectation of the services they should receive from their broker or how to extract value from the relationship by building this commercial arrangement.
Aon Risk Solutions head of marketing Andrew Gordon said that failing to do so could leave business unnecessarily exposed, and the survey conducted by Aon showed some deficiencies in the way businesses sought information about their insurance needs.
The survey found that 50 per cent of businesses relied on recommendations from colleagues in seeking information, while industry associations and broker recommendations lagged behind at 34 per cent and 33 per cent respectively.
The survey conducted by Aon covered 100 businesses with turnovers between $15 million and $100 million. It also included qualitative research into the relationship between business and brokers and how they interact.
Gordon said the lack of communication was a concern for both businesses and brokers, given that more than two-thirds of businesses surveyed rated their insurance needs as complex.
“It’s frankly unlikely that consulting with colleagues is going to provide the information a business needs to get the right type and level of insurance.”
Gordon stated that typically businesses were underinsured by 25 to 45 per cent and relied on incorrect advice, false assumptions, faulty self-assessment and incorrect valuations, but this could be corrected by having open discussions with reliable sources of information around insurance.
“Many businesses report frustration with a number of elements of their broker relationship, including infrequent transactional style contact, when a full and frank exchange of relevant information between broker and business is required.
“It’s not necessarily been standard in our industry to reveal this kind of information, but based on survey findings and other evidence, it’s an approach we need to take to turn our industry knowledge into an advantage for our clients. That way they can avoid being unprepared to recover from even relatively commonplace events,” Gordon said.
AUTHOR
Jason Spits
Recommended for you
As private markets garner mainstream attention, a panel of experts believe access to the asset class through managed accounts will become more widely available, providing opportunities for advisers to diversify portfolios.
While retail investors turned to blue-chip stocks last month, according to AUSIEX trading data, September saw advised investors switch into ETFs.
With the intergenerational wealth transfer underway in Australia, wealth managers are focusing on how they can attract the next generation of advisers to service these younger clients.
ASIC wants to expand proceedings against Equity Trustees to seek compensation for members following Macquarie’s agreement to pay $321 million over Shield failings.
