In Partnership with
Delving into the SME insurance landscape
Leading figures in commercial insurance weigh in on possible shoals, doldrums and tailwinds in the SME market and how brokers can make headway in the coming months
Damien Coates
DUAL Asia Pacific
Industry experts
Michael Cooke
Vero
Mark Polglase
Blue Zebra
Trevor Baldwin
Baldwin Risk Partners
Damien Coates founded DUAL in Australia in 2004. As chief executive, he has overseen the expansion of the business with offices throughout Australia, New Zealand and Asia. He has a keen interest in mental health issues, having built and managed a successful company while meeting his own mental health and wellbeing challenges, with his three pillars of success being communication, diet and exercise and medication. Coates is a long-term supporter of many charities and takes part in cycling, running and adventure challenges to raise money. In 2019, he expanded his role in mental health advocacy through corporate and community speaking engagements.
DUAL Asia Pacific
Damien Coates
Michael Cooke has 23 years’ experience in the insurance industry and has been at Vero for 15 years. During his time at Vero he has worked in a variety of roles, including in underwriting, underwriting team leadership, underwriting agency leadership, and product and portfolio management. Cooke joined Vero’s SME package business in October 2019 and since October 2020 has held the role of executive manager intermediated packages portfolio. He has a Bachelor of Commerce degree with majors in economics and marketing from Macquarie University and a Master's in Business Administration (including a Graduate Diploma in Insurance) from Deakin University.
Vero
Michael Cooke
Mark Polglase is chief underwriting officer (SME) at Blue Zebra and brings to the company over 25 years of leadership and strategi experience with major international insurers. Most recently he was group head of SME and customer retention at QBE, accountable for the development and execution of a global SME strategy. Polglase has worked in a variety of local, regional and global roles, and was based in Hong Kong for seven years. His substantial expertise includes multiclass underwriting, product development, portfolio management, senior account management, strategic sales and distribution, claims management and operational excellence.
Blue Zebra
Mark Polglase
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partners
Trevor Baldwin
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Vault Plus Mortgage and Finance Consultancy
David Merison
“As an industry, [we] need to lend our weight with governments at all levels to try and ensure that we know future planning and rebuilding of these vulnerable communities takes place and to enable them to continue to operate their communities with insurance being available and affordable”
Michael Cooke, Vero
TOP COMMERCIAL insurers say small to medium enterprises that thought they might be able to come up for air in 2022 will likely find themselves facing choppy conditions.
Key challenges that three market leaders anticipate in the months ahead range from newish ones such as cybercrime that have morphed, golem-like, into an ever-present threat, to the resurgence of themes like inflation, which has analysts worldwide dusting off and crunching data from 40 years ago.
“There’s a whole lot of challenges on the horizon at the moment that we’re working our way through, but probably inflation is the one that we’re keeping a really close eye on in the short term,” said Blue Zebra Insurance chief underwriting officer (SME) Mark Polglase at a recent Executive Insights panel on Insurance Business TV.
Inflation dovetails with other more recent issues familiar to the market, such as COVID-19 and natural disasters.
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio, MarshBerry
“The flood cover is simply not available for a lot of SME businesses in these environments at the moment”
Mark Polglase,
Blue Zebra
“The last few years have told us to expect the unexpected or even the unprecedented,” he said.
DUAL’s Coates said customers were most worried about cybersecurity.
“Cyber is without doubt the biggest concern in the market,” he said. “The proliferation of social engineering, the phishing claims, we really don’t know where cyber is going to end up.”
Coates said one recent payout of $700,000 involved a transport company that was not able to operate for two weeks due to a lack of access to their own systems. SMEs needed assistance from insurers and brokers in getting up to speed with related issues and beefing up security.
“We’ve got to use technology as an enabler to make sure that we are connecting capital that’s prepared to take a risk with an insured who has a risk”
Damien Coates,
DUAL Asia Pacific
“But I think we’re still a long way from seeing the true impact,” he added.
Vero’s Cooke said that, aside from the pandemic, natural hazards were increasing and affecting areas that had not been so impacted in the past.
“I think that’s a challenge, particularly around how insurers meet their customers’ expectations,” Cooke said.
He pointed out that insurers and brokers had a role to play in risk mitigation around disasters.
“The long-term impact of climate-driven [natural catastrophe] as we’re experiencing now, the continuing economic impacts of COVID as we move to the next stage in terms of will businesses survive and recover, I think it’s such that we need to price those risks,” he said.
The way the industry could help brokers and SMEs digest some of these likely extra costs was through more reliance on technology, a long-standing issue for insurers that could no longer be ignored.
“We’ve got to stop the ping-pong,” said Coates.
“We’ve got to use technology as an enabler to make sure that we are connecting capital that’s prepared to take a risk with an insured who has a risk.”
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
1.7%
3.8%
7.0
All ADIs
Major Banks
Mutual Banks
Premium costs expected to rise
7.5%
6.7%
11.3%
5.3%
4.9%
3.8%
3.0%
3.6%
3.6%
8%
7.3%
“Materials are really subject to high inflation at the moment, labour shortages, particularly around the diversion to some of the natural disasters that we’re currently seeing, and delayed repair,” said Polglase.
While climate-related disasters were a known risk in general, the recent floods highlighted that there was a significant amount of underinsurance or a plain lack of insurance among SMEs, he said. The majority of claims Blue Zebra had so far received related to the flooding in Queensland and NSW were for domestic property or motor, with only around 3% for commercial – an obvious under-representation given the flooding’s impact on local SMEs.
Polglase suggested that firms were not offering the relevant insurance necessary to keep businesses surviving.
“As an industry, [we] need to lend our weight with governments at all levels to try and ensure that we know future planning and rebuilding of these vulnerable communities takes place and to enable them to continue to operate their communities with insurance being available and affordable,” Cooke said.
Brokers also had a “big gap” to try to fill in terms of making sure that advice was up to date and fit for purpose given these unexpected events.
“Less than half of those SME customers have had advice on the adequacy of their insurance at their last renewal,” said Cooke, citing Vero's 2022 SME Insurance Index research.
But this was partly due to the risk environment changing so quickly, rather than a lack of desire to engage.
“It’s very, very clear that customers do want to rely on their brokers’ advice; it’s just that they don’t always receive it,” he claimed.
SMEs HAVE REDUCED COVER DURING THE PANDEMIC
CUA
Billion
12%
$17.44
Billion
$10.83
1%
Billion
$10.09
6%
Newcastle Permanent
Heritage Bank
Billion
$8.81
5%
People's Choice
Billion
$8.04
Teachers Mutual
14%
“The flood cover is simply not available for a lot of SME businesses in these environments at the moment,” he said.
Looking ahead, focusing on such uninsured exposures would be key to brokers succeeding in a market where gaps have suddenly appeared on the map, said DUAL Asia Pacific chief executive Damien Coates.
“We as an industry are still navigating as to where the exposures lie,” he said.
The executive manager of Vero's intermediated packages portfolio, Michael Cooke, said 2022 would be another year in which brokers should be ready for anything and should think “very, very broadly” about the types of cover they were buying their customers.
“We really need to help communicate and educate SMEs as to what the core principles of cybersecurity are, because otherwise we will end up with a product that will be uninsurable,” he said.
In this fast-evolving area, he said it paid to apply a broad brush in terms of hedging risk.
Coates thought the impact of COVID was far from over, given that many businesses in the most affected sectors like accommodation, hospitality and tourism had only survived due to massive government spending.
“We’re at the tip of the iceberg because the government support has been there to alleviate the real financial impact of, long term, will businesses come back?” he said.
It was heartening to see lockdowns ending and more businesses reopening in CBD areas, however.
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executive insights
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Insight Leaders
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While staying ahead of the risk curve was tough, with previously unthinkable elements emerging, like novel coronaviruses or weather event impacts far outside the probability curve, some sectors were surviving.
Areas that had weathered the COVID economy well were tech, construction firms and trades, as well as retailers who had been able to pivot to serve work-at-home customers.
Some of these societal changes would be permanent, Cooke said, but the combined effect of the tough environment and multiple challenges that SMEs had faced would unfortunately translate into higher premiums over the next 12 to 18 months.
Cooke agreed that technological advancement was one of the main challenges insurers currently faced in terms of meeting brokers’ and customers’ expectations around service.
“We need to use technology to make our industry more efficient,” he said.
Boosting the role of technology would not only make the process more efficient but would also focus insurer efforts on reducing the cost base.
“We’re hearing a lot from our broker partners about responsiveness and accessibility to insurers,” said Polglase, adding that technology and support staff should continue to exceed expectations.
In-house surveys at Blue Zebra showed that more than two thirds of customers would prefer to deal with a broker through their claim than the insurer directly.
Brokers wanted ease of process as one goal of any technology push, but Polglase pointed out that tech could not replace the human aspect, particularly with regard to ensuring broker access to decision-makers.
“The most important thing at the moment is the personal engagement,” he concluded.
Blue Zebra (BZI) is an insurtech underwriting agency catering exclusively to brokers and their clients. BZI also offers its technology platform as a service (PaaS) to selected insurance partners. The company wrote its first policy in April 2018 and offers a full suite of personal lines products, SME, commercial motor, personal accident and cyber insurance. With over 100,000 customers, Blue Zebra leverages big-data sources to assist the quote process and enhance its understanding of the underlying risk. Its small and highly empowered team deploy technology tools to streamline and automate back-end processes while delivering great service and efficiency.
Find out more
DUAL specialises in accident and health, financial lines and general liability insurance. DUAL Australia is a true SME insurance business with over 100,000 policies transacted annually with over 8,500 individual insurance brokers spread across the country. It has offices across Australia in Sydney, Melbourne, Perth and Brisbane, and employs more than 120 people. DUAL underwrites on behalf of a number of APRA-regulated insurers, including certain underwriters at the prestigious Lloyd’s of London established in the late 17th century. It is Lloyd’s largest intermediated coverholder in Australia. The wider group has offices in Singapore, Hong Kong, Auckland, Wellington and Christchurch.
Find out more
Vero provides quality business insurance products to help protect Australian businesses. Because Vero believes that impartial specialist advice is paramount when it comes to selecting insurance, it offers its products through insurance brokers. With over 180 years of experience in providing insurance, Vero delivers an award-winning claims service, so brokers can be confident in recommending Vero to clients. Vero provides brokers access to one of the largest risk engineering teams in Australia, as well as local BDMs, underwriting and claims teams who bring expertise, intelligence and experience to their relationships.
Find out more
“At a macro level, the fundamental forces that have driven consolidation across the insurance distribution landscape remain as prevalent today as ever”
Trevor Baldwin,
Baldwin Risk Partners
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio,
MarshBerry
“Sellers no longer view a robust technology offering as a nice-tohave item; if a buyer isn’t bringing technology enhancements as a value proposition to the table, they are going to lose out on more transactions than they win”
Timothy J. Hall,
Relation Insurance
“Traditionally, financial services have not been the first investment area for most private equity funds, but today, insurance is an attractive industry because it has been stress-tested”
Phil Trem,
MarshBerry
In Partnership with
M&A
Insights 2021
Insurance Business America uncovers the answers to brokers’ biggest questions about mergers and
acquisitions, with expert insight from MarshBerry, Baldwin Risk Partners and Relation Insurance
Read on
Trevor Baldwin
Baldwin Risk Partners
Mark Polglase
Blue Zebra
Michael Cooke
Vero
Damien Coates
DUAL Asia Pacific
Industry experts
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
All ADIs
Major Banks
Mutual Banks
8%
7.3%
7.5%
3.6%
4.9%
11.3%
5.3%
3.8%
3.6%
3.0%
6.7%
3.8%
1.7%
7.0
Loan Portfolio Growth (2015-2019)
TOP 10 MUTUAL BANKS BY TOTAL ASSETS, 2019
CUA
Billion
$17.44
12%
Newcastle Permanent
Billion
$10.83
1%
Heritage Bank
Billion
$10.09
6%
People's Choice
Billion
$8.81
5%
Teachers Mutual
Billion
$8.04
14%
BRP is an award-winning entrepreneur led and inspired insurance distribution holding company delivering solutions that give our clients the peace of mind to pursue their purpose, passion and dreams. Our family of firms’ best-in-class resources and diverse portfolio of services are innovating the industry by taking a holistic and tailored approach to insurance, risk management and employee benefits.
Find out more
Founded in 1981, MarshBerry has grown to become the nation’s #1 M&A Advisory Firm and top growth consultant to insurance agents & brokers, specialty distributors, private equity firms, banks & credit unions and insurance carriers, through industry-specific services that include: Merger & Acquisition Advisory, Debt & Equity Capital Raising, Organic Growth Consulting, Market Intelligence and Connect–Peer Exchange Network.
Find out more
Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find out more
executive insights
Top
Insight Leaders
Overview
General Stats
Insights
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partner
Trevor Baldwin
“At a macro level, the fundamental forces that have driven consolidation across the insurance distribution landscape remain as prevalent today as ever”
Trevor Baldwin,
Baldwin Risk Partners
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio,
MarshBerry
“Sellers no longer view a robust technology offering as a nice-tohave item; if a buyer isn’t bringing technology enhancements as a value proposition to the table, they are going to lose out on more transactions than they win”
Timothy J. Hall,
Relation Insurance
“Traditionally, financial services have not been the first investment area for most private equity funds, but today, insurance is an attractive industry because it has been stress-tested”
Phil Trem,
MarshBerry
In Partnership with
M&A
Insights 2021
Insurance Business America uncovers the answers to brokers’ biggest questions about mergers and
acquisitions, with expert insight from MarshBerry, Baldwin Risk Partners and Relation Insurance
Read on
Trevor Baldwin
Baldwin Risk Partners
Mark Polglase
Blue Zebra
Michael Cooke
Vero
Damien Coates
DUAL Asia Pacific
Industry experts
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
All ADIs
Major Banks
Mutual Banks
8%
7.3%
7.5%
3.6%
4.9%
11.3%
5.3%
3.8%
3.6%
3.0%
6.7%
3.8%
1.7%
7.0
Loan Portfolio Growth (2015-2019)
TOP 10 MUTUAL BANKS BY TOTAL ASSETS, 2019
CUA
Billion
$17.44
12%
Newcastle Permanent
Billion
$10.83
1%
Heritage Bank
Billion
$10.09
6%
People's Choice
Billion
$8.81
5%
Teachers Mutual
Billion
$8.04
14%
BRP is an award-winning entrepreneur led and inspired insurance distribution holding company delivering solutions that give our clients the peace of mind to pursue their purpose, passion and dreams. Our family of firms’ best-in-class resources and diverse portfolio of services are innovating the industry by taking a holistic and tailored approach to insurance, risk management and employee benefits.
Find out more
Founded in 1981, MarshBerry has grown to become the nation’s #1 M&A Advisory Firm and top growth consultant to insurance agents & brokers, specialty distributors, private equity firms, banks & credit unions and insurance carriers, through industry-specific services that include: Merger & Acquisition Advisory, Debt & Equity Capital Raising, Organic Growth Consulting, Market Intelligence and Connect–Peer Exchange Network.
Find out more
Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find out more
executive insights
Top
Insight Leaders
Overview
General Stats
Insights
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partners
Trevor Baldwin
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Proportion of SMEs that reduced insurance in the last 6 months
Source: Vero SME Insurance Index Report 2021
54%
No, I have not made any reductions
12%
Yes, I have made small reductions
24%
Yes, I have made moderate reductions
10%
Yes, I have made large reductions
Expectations of cost of insurance
Broker clients
Direct buyers
Total
Source: Vero SME Insurance Index 2021
58%
20%
4%
18%
40%
39%
12%
9%
47%
31%
9%
13%
Higher
The same
Lower
Unsure
“As an industry, [we] need to lend our weight with governments at all levels to try and ensure that we know future planning and rebuilding of these vulnerable communities takes place and to enable them to continue to operate their communities with insurance being available and affordable”