Small to medium enterprises (SME) were more engaged with life insurance than consumers but still remained under-insured, according to a new report released by MetLife Australia.
The MetLife Adviser-Client Relationship Report 2018 also found that when SMEs interacted with a financial adviser, they had higher expectations of the services provided and around 40 per cent had stopped using an adviser who did not provide adequate service.
The report is based on a survey of attitudes to purchasing life insurance through a financial adviser conducted with 200 SMEs that had up to 20 employees, and with 1,000 consumers.
The survey found that 63 per cent of SMEs had Income Protection insurance, 58 per cent had Death Cover and 55 per cent had TPD cover, only 35 per cent had Key Person cover in place, 30 per cent had Trauma cover and 27 per cent held Buy/Sell Insurance.
MetLife Australia Head of Retail Sales, Matt Lippiatt said while SME’s had higher levels of engagement with insurance than consumers, the level of underinsurance was still of concern given that SMEs make up almost 40 per cent of Australia’s Gross Domestic Product. He added the results indicate many businesses may be exposed to financial hardship or failure if they experienced any business interruption.
“…having a trusted adviser who can provide education on the right type and structure of insurance cover…can make a big difference to this group”
The survey found SME’s were responsive to financial advice and that 80 per cent of respondents had a better understanding of insurance after seeing an adviser, more than half who had an annual review with an adviser altered their insurance, and a third were likely to purchase insurance cover in the next two years.
Lippiatt said small businesses were often misunderstood by the insurance industry due to their unique needs “…therefore having a trusted adviser who can provide education on the right type and structure of insurance cover related to their business can make a big difference to this group”.
SMEs were also found to have higher expectations of advice and were ready to change advisers when the believed they were not receiving value, but were also loyal to those who met their needs.
MetLife said that more than four in 10 SMEs surveyed had intentionally stopped using an adviser and gave price, poor advice, a lack of contact, a lack or value for money or difficulty with dealing with their adviser as the reason, compared to 25 per cent of consumers.
At the same time, 40 per cent of SME’s have maintained an advice relationship for five years or more stating they were likely to recommend them due to their trustworthiness, honesty, genuineness, effective advice, experience, accessibility and overall responsiveness and communications.
“Small business owners are time-poor, and they’re looking to their adviser to show them genuine care and give them value-added services such as home / office visits negotiating with insurers on their behalf, regularly reviewing their cover and putting in regular calls and emails to ‘check in’. Providing excellent, personalised service makes this group more loyal and helps them get real value from their adviser,” Lippiatt said.
