2025 Vero SME Insurance Index uncovers insights about underinsurance

As the Australian business landscape continues to evolve, businesses are asking brokers for strategic support, not just advice on the right insurance coverage.

It’s something that comes through clearly when you read the 2025 Vero SME Insurance Index.

This marks the 14th consecutive year that Vero has surveyed trends in business insurance and market conditions for Australian businesses, turning the results into an in-depth Index for brokers.

“Having independent research that spans over a decade has enabled ourselves and our broker partners to develop new ideas and initiatives that support the SME segment,” says Anthony Pagano, Head of Distribution at Vero.

“What better way to learn about SMEs, their insurance purchasing needs and their behaviours than to hear from 1,750 real Australian businesses about opportunities, issues and the role brokers can play."

Businesses continue to do it tough

The latest Index reveals that nearly half of businesses (49%) experienced a decline in revenue. During these tough times they have called out broker expertise and consistent, collaborative service as reasons to use an insurance broker. 

This year’s data suggests that businesses are increasingly seeking comprehensive risk advice, particularly in the wake of recent economic challenges – and are also more likely to switch brokers if they see fit. 

“A changing broker landscape has shown it is easier than ever before for SMEs to switch brokers, with over a quarter of Australian businesses already having done so,” says Pagano.

But he also feels that brokers – many of whom are SMEs themselves and understand the pressures at play – are the right people to educate and assist.

“Running an SME business is becoming more complex, so there's no better option than having support from a professional who is an SME themselves,” Pagano asserts.

Increased underinsurance

A key insight from this year’s Index is that an increasing number of businesses are making reviewing their sums insured a low priority – if they do at all.

Meanwhile, almost 10% of businesses say they’re currently underinsured. This is due to what Pagano says is “a lack of understanding coupled with cost of living pressures”.

His sentiments are echoed by others in the industry. For example, Mitch Wight, Senior Broking Executive at Aviso Integral says the company sees a fair amount of push back on replacement costs on buildings as clients don’t believe it can cost that much.

"That’s where our role as brokers really comes into play – to ensure we are checking in with clients to help educate them and check that their sums insured are keeping up with inflation and market costs,” he says.

Julie Lumbis, Head of SCTP at Steadfast adds that businesses with a really small margin are usually the first to try saving costs on things like insurance.

"It's our job to be a trusted advisor and make sure they're aware of the consequences of underinsuring,” Lumbis says.

Mitigating risk

An increasing lack of formal risk management analysis and processes in place at Australian businesses is another trend identified by the Index – which was a surprise to Anthony Pagano.

“Despite all the efforts to educate businesses that risk mitigation or avoidance far outweighs the direct and indirect costs of a claim or near claim, it is still not front of mind for many,” he says.

As a broker, Wight (Aviso) explains that businesses he sees are often more focused on product risks than external risks for example.

"A more holistic approach might have them mitigate for disruptions to suppliers or issues with IT systems,” he says. 

Meanwhile, the number of emerging risks SME businesses can face continues to grow – with one complex development from the world of technology set to make a massive impact: artificial intelligence (AI).

“AI is commonly ignored due to the perceived complexity of its processes and capability,” Pagano says. 

“But robust AI frameworks can play an important role in ensuring businesses can mitigate risks in implementing AI technology – and brokers can again play a valuable role in advising clients of the need for AI frameworks as part of their risk management strategy.

”To gain further insight from the 2025 Vero SME Insurance Index and to receive 1 NIBA accredited CPD point, watch the webinar or download the report.

Disclaimer: AAI Limited ABN 48 005 297 807 trading as Vero Insurance (Vero) has sponsored this article and commissioned the 2025 SME Insurance Index Report. The information provided is intended to be of a general nature only. Subject to any rights you may have under any law, Vero and its related bodies corporate do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon it – please make your own enquiries. Vero and its related bodies corporate do not guarantee the accuracy, reliability, completeness or currency of the information provided. Any advice provided by Vero has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you or your business before acting on it. The information is not a recommendation or statement of opinion about whether a reader should acquire insurance from Vero (or its related bodies corporate) or services from any insurance intermediary or otherwise alter their business arrangements. Readers should confirm information and interpretation of information by seeking independent advice.