The difference between being adequately insured or not can mean the difference between a business being able to continue operating or not after an unfortunate incident. However, like many industries, insurance is being disrupted by the proliferation of online information and options. A more educated customer base plus the easy availability of insurance products online means many SMEs believe they can get better information on business insurance by shopping around online. This isn’t necessarily true and can mean SME owners end up buying policies that don’t provide adequate cover or that don’t appropriately pay out when disaster strikes.
When consumers are looking to insure less complex products such as their car or home, online commoditised insurance products can potentially save time. However, when it comes to insuring a business, SME owners would be better off working with an insurance broker who can provide risk management advice and, in the case of an insured event, help manage the SME’s insurance claim to a successful conclusion.
Purchasing insurance online is problematic for SME owners for three key reasons:
1. Under- or over-insurance. A lack of knowledge about all the risks the business may face can lead to the business being under-insured, which means owners may be out of pocket if an event occurs. Or, they may purchase insurance that they do not need, which means they’re spending too much on premiums.
2. High premiums. SME owners don’t have access to the industry knowledge and economies of scale that insurance brokers have. This means they can’t effectively negotiate the best possible premiums for themselves. In many cases, it also prevents the SME from accessing certain policies that are only available through brokers.
3. Uncertain claims. When an insured event happens, the paperwork involved in submitting and supporting a claim can be burdensome and confusing. If SME owners inadvertently leave out critical information, the claim could be denied or their payout reduced. Insurance brokers are familiar with the claims process and can manage the claim from beginning to successful conclusion.
Insurance brokers are well-versed in managing claims. SME owners struggling in the aftermath of an insured event have enough on their minds without navigating the sometimes murky waters of the claims process. Many brokers take over the claims management process, working for the client to ensure the most positive outcome.
Because clients have a personal relationship with their broker, it’s easier to get an update on the progress of the claim or to ask questions. Trying to claim using an online process can feel anonymous and confusing. Forgetting one piece of information or paperwork can lead to the claim being denied or reduced, even if the SME owner is entitled to full compensation. So getting this process right is crucial.
Brokers tend to have strong relationships with insurance providers, which they can rely on to get maximum results for their clients. If there are any disputes, the broker can handle them with expert knowledge, which is ideal if the claim is in a grey area. The broker can help ensure that the insurance company has every reason to approve the claim.
While buying insurance online may seem like a good idea at the time, SME owners should think ahead to what happens when they need to make a claim. They need to ensure they’re fully covered and that their claim will be paid promptly. The safest way to do this is to enlist the help of an expert insurance broker, rather than leave their insurance to chance.
Nigel Thomas, Divisional Chief Executive – Austbrokers Network, AUB Group