New research by an SME insurance specialist reveals how rapidly the COVID-19 crisis is impacting the SME sector, with most business seeing a big decline in activity and many having to close their doors.
BizCover has seen a decline in the number of searches for, and enquiries about, insurance policies and a significant rise in policy cancellations since the pandemic has taken hold.
Tracking the SME insurance market for Enquiries, Cancellations and Renewals on a daily basis since February, BizCover’s CEO, Michael Gottlieb, said that the number of enquiries his company has received since the first week of March has dropped by a third.
“Fewer businesses have been seeking insurance since the shift in March, with enquiries for occupations such as hairdressers, massage therapists and clothing retailers down between 34 and 46 per cent over the last two weeks alone,” Gottlieb said.
“By 24 March, policy cancellations by SME operators dramatically increased by 51 per cent above the average cancellation levels seen in February. This is a level we have not witnessed in our business before. Downturn on renewals has been much slower with only a nine per cent decline in the renewal rate since mid-March.”
The research confirms that COVID-19 related issues are the primary driver cancellations of policies, despite many of the insurers Bizcover works with attempting to retain customers by offering extended payment periods and deferred payment options.
“Unfortunately, a large number of businesses simply can’t afford insurance due to the loss of cashflow and we expect this trend to spike in the short term while the nation goes into lockdown,” Gottlieb said.
There are some exceptions to the downward trend, however, with plumbers and personal fitness trainers actually making more enquiries about cover options in the last two weeks.
“Even in times like these, it’s encouraging to see some SMEs forging ahead and maintaining business continuity or pivoting to different business models,” Gottlieb said.
“Many businesses are still trying to adapt to the current work from home trend,” He added. “Operators who were already running their businesses from home prior to COVID-19 would have had a distinct advantage in operating efficiency in this new environment.”
The research does reveal that, although the SME sector is in a parlous position at the moment, many business owners only see it as a temporary problem and are confident they will be able renew normal operations once the health crisis has passed.
