Over a third of SMEs do not have a succession plan in place and almost half say their business would only be able to operate for up to a year if they were unable to work, according to a new report by MetLife Australia.
The MetLife Adviser-Client Relationship Report 2018 examines consumer and SME attitudes to purchasing life insurance through an adviser, surveying consumers and small to medium enterprises (SMEs) with up to 20 employees.
Positively, 63 per cent of SMEs surveyed have Income Protection insurance, while 58 per cent have Death cover and 55 per cent are insured for Total and Permanent Disablement. However, a much lower number have Key Person (35 per cent), Trauma (30 per cent) and Buy/Sell insurance (27 per cent).
Commenting on the findings, Matt Lippiatt, MetLife Australia Head of Retail Sales, said while SMEs were more engaged with their insurance than consumers, there were signs that underinsurance was still a worrying issue.
“SMEs are the lifeblood of Australia, making up almost 40 per cent of GDP, but these results show that many are leaving themselves exposed to financial hardship or business failure should any business interruption occur,” he said.
The study found regular reviews with a financial adviser can help SMEs to feel better prepared. Eight in 10 have a better understanding of insurance as a result of seeing an adviser, while over half of SMEs who have had an annual review with an adviser altered their insurances as a result.
“SMEs are often misunderstood by the insurance industry as they have very unique needs and there is no one-size-fits-all approach. Therefore having a trusted adviser who can provide education on the right type and amount of insurance cover can make a big difference to this group,” Lippiatt said.
Overall, the study found that SMEs have higher expectations than consumers when it comes to service from their adviser. Over four in 10 have intentionally stopped using an adviser, citing price, poor advice, lack of contact, not enough experience or a lack of value-add, compared to a quarter of consumers.
However, SMEs are also a loyal group when they find the right adviser. A high number (40 per cent) of SMEs have been with their adviser for five or more years.
“This is a time-poor group, and they are looking to advisers to provide value-added services such as home visits, negotiating premiums on their behalf, regularly reviewing their insurances and putting in regular calls to ‘check in’. Providing excellent, personalised service not only makes this group more loyal but also makes them more likely to refer,” Lippiatt said.