75% of UK SMEs say competitive price is key factor in buying business insurance

Lowest premium is key insurance buying factor as insurer and broker advice is undervalued according to QBE Survey.

Key points

• 75% of UK SMEs say competitive price is key factor in buying business insurance

• A third would rather buy business insurance direct, rather than via a broker

• Only 16% of UK SMEs will look to the insurance industry for advice in the first six months of 2010

UK SME’s feeling the pinch

QBE’s third survey of small and medium sized enterprises (SMEs) identified that the majority, 75%, of UK SMEs view a competitive price as the most important factor when buying insurance – a sentiment that perhaps indicates recession-related cost constraints are still driving UK business decision making.  This was highlighted by the survey’s finding that 71% of SMEs in the UK believe that they would find it difficult but manageable at best if current economic conditions were to persist.

Lowest premium dominates thinking

Focus on price was the priority for SMEs across the UK, except in the Midlands and Wales where the financial security of the insurer was their main concern.  In all other UK regions, including London, the financial security of the insurer was the second most important factor, after competitive price.

The UK SME top seven

Benefits of the broker service unknown to 1 in 10 UK SMEs

The survey found that a surprising third of UK SMEs would be happy to reduce the cost of buying business insurance by going direct to an insurer and thereby avoiding broker commission.  A further 1 in 10 were uncertain of the benefits of a broker service, suggesting that this is not being adequately explained by their current supplier.

Few SMEs will look to the insurance industry for advice in 2010

The survey found that only 16% of UK SMEs intend to look to the insurance industry for advice in 2010, with only 11% looking to insurance brokers and a mere 5% to their insurers.  This reluctance may indicate that, while SMEs may understand their legal commercial insurance requirements, many may not view their broker or insurer as a source of practical advice on mitigating risks to their business.

Terry Whittaker, Managing Director, National Division, QBE European Operations, commented: “Given the current economic environment, it is unsurprising that price is the top priority for UK SMEs. However, as an industry there clearly is work to be done in explaining the added value that a quality insurance service from brokers and insurers can deliver.  With SMEs unable to absorb significant rate rises and insurers operating under a necessity to underwrite profitably, it is essential that insurers and brokers work together to promote the benefits of their offering.”

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