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Asteron Life research reveals only 17% of SMEs have income protection insurance

10 April 2018

Asteron Life today released research that reveals just 17% of small and medium enterprise business owners and decision makers (SMEs) have income protection insurance.

The finding comes as part of the launch of the first Asteron Life SME Insurance Index, which examines the insurance purchasing landscape for SMEs and their attitudes towards advisers.

“97% of New Zealand businesses have 20 or fewer employees, which means that SMEs represent a significant market for insurers and brokers,” said Trevor Longbottom, Acting Executive Manager Life Distribution at Asteron Life. 

“This research is the first step towards helping advisers understand the unique challenges faced by SMEs, and identify ways to tailor their offering towards them.”

The research shows that while penetration of life insurance is high with the SME market, with 61% having life cover, uptake of other personal insurance products is considerably lower.

“The uptake of personal insurance products shows there is a significant opportunity to talk to SMEs about covers like income protection insurance, particularly in the context of their business ownership and how that might affect their cover,” said Mr Longbottom.

Considerable opportunities for advisers who will look after all policies

Although time was identified as a major challenge for SME customers, only 52% of those with life insurance indicated that they used an adviser because it saved them time. 

  • 36% of SMEs stated they are trying to do everything on their own
  • 31% said they have no time for themselves or their family 
  • 26% identified managing their time as a major challenge.

According to Longbottom, the research showed that for many SMEs there is considerable appeal in having one adviser look after all of their policies.

“SMEs are facing a lot of time pressure and many are also feeling quite isolated. This represents a significant opportunity for advisers to add and demonstrate value,” said Mr Longbottom.  

“Feedback from the SMEs we interviewed showed there was real appetite for advisers to be assisting with insurance products across the full spectrum of business and personal needs.”

Price not the main driver for SME customers

The research showed that the top reasons SME customers with life insurance use an adviser is expertise (86%) and service (70%). 

Interestingly, price was a lower consideration with only 45% of SMEs saying they used an adviser because of price, and only 49% saying they thought finding the cheapest policies was important.

“It’s great to see that when it comes to life insurance, SMEs are really looking for expertise and service,” said Mr Longbottom. “Customers are relying on adviser to help them find the right cover, not just the cheapest cover.”

The survey also identified other ways advisers may be able to demonstrate value for SME customers, including:

  • giving advice on changes to their business that might impact their insurance (64%)
  • providing them with general advice on insurance (52%) 
  • offering advice on ways to mitigate risk (51%).

Life insurance uptake influencing SME peace of mind

The research revealed that SME customers with life insurance showed significant differences in attitude to those without. 

Customers with life insurance were more likely to say that being insured gave them peace of mind (96%), and more likely to be confident that they had the right insurance (75%). 

“Not surprisingly, trust was particularly important when it comes to buying life insurance,” said Mr Longbottom.

SMEs feel considerable fear about being sold a product that does not suits their needs, and want to be able to believe that the adviser is acting in their best interests.

Download the report

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