SME owners lack income protection

Asteron Life research has found only 17% of small and medium enterprise business owners and decision-makers (SMEs) have income protection insurance.

Tuesday, April 10th 2018, 12:00PM

The insurer is launching its first life SME insurance index, looking at 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 of 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 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,” Longbottom said.

Sixty-one per cent of the SME owners and decision-makers had life insurance.

Just over half of them said they had used an adviser because it saved time. More than 85% chose an adviser because of the expertise and 70% because of their service. Price was a consideration for 45%.

Longbottom said there was appeal in having one adviser look after all 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,” Longbottom said.

“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.”

SME customers also wanted advice on how changes to their business might affect their insurance, general advice on insurance and advice on other ways to mitigate risk.

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,” Longbottom said.

SMEs worried about being sold a product that did not suits their needs, and wanted to be able to believe that the adviser is acting in their best interests.

Tags: Asteron Income Protection Life insurance