By Schaun van den Berg, Retail Executive for Alternative Business Solutions at Old Mutual Insure
Brokers play an essential role in the SME advice gap
According to the latest SME Confidence Index, conducted by specialist SME financier Business Partners, South African small and medium enterprises (SMEs) identify cash flow, economic conditions, and funding as their top three challenges. Interestingly, crime—previously the leading concern—has dropped down the list. This shift suggests that SMEs are prioritising financial stability and adapting to the uncertain business environment.
In this climate, insurance has a critical role to play in supporting SMEs. Despite this, we are seeing a significant advice gap emerge in this market. This is an opportunity for brokers. Given that the insurance needs of SMEs are more specialised and change as the business grows, brokers are uniquely positioned to guide them with bespoke, stage-specific advice.
Small businesses operate on tight margins, making them more vulnerable to financial shocks. One unexpected disruption can have serious consequences. That’s why insurance, when correctly tailored, should be a strategic enabler for SMEs rather than just a tick-box exercise.
Matching insurance to business growth phases
Startups and early-stage SMEs face high exposure to liability and reputational risks. A single lawsuit or reputational damage can be devastating, making liability insurance essential. Public liability cover protects against third-party claims due to injury or property damage, while professional indemnity insurance protects service providers against claims arising from errors, omissions, or negligence. As many SMEs digitise operations and manage sensitive customer data, the risks of data breaches or ransomware attacks increase. Cyber insurance helps manage the financial and operational fallout of these events.
As SMEs scale, their risk profile changes. Key employees become central to operations, assets accumulate, and business continuity becomes more important. Key person insurance ensures the business can recover financially from the loss of critical talent. Property insurance covers buildings, inventory, and equipment, while business interruption insurance helps the enterprise maintain cash flow during temporary disruptions.
For larger or more established SMEs, risks become increasingly complex. These businesses often depend on contractual agreements and trade credit, making them vulnerable to customer defaults or supply chain failures. Trade credit insurance and credit guarantee products are essential tools for maintaining cash flow and protecting against bad debt.
Moreover, as businesses expand, executives take on greater responsibility and legal exposure, making directors and officers (D&O) insurance critical in shielding decision-makers from personal liability arising from business decisions.
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The role of the broker
Navigating these risks requires expertise, making the role of brokers and financial advisers indispensable. Brokers play a pivotal role in helping SMEs identify their specific risk exposures, structure appropriate cover, and adapt their insurance strategies over time at each stage of growth. Brokers should also help SMEs see insurance as part of a wider financial plan. By integrating risk mitigation into their broader growth strategy, SMEs are better positioned to manage both short-term shocks and remain relevant.
Education and awareness are also essential components of effective risk management, with brokers being essential to this process. Many business owners may not fully understand the scope of risks they face or the options available to mitigate them.
Top insurance tips for brokers working with SMEs
- Work with insurers who understand the SME market: Partner with providers who offer tailored solutions aligned to different stages of business growth.
- Speed, track record and customer service matter when it comes to claims: Insurance is often the only buffer SMEs have during a crisis. Long delays or poor service can compound an already tough situation. Choose insurers with high claims payout rates, low rejection rates, and a clear, responsive claims process from registration to final settlement.
- Technology can be a competitive advantage: Look for insurers investing in smart systems, AI, and data analytics. These tools help brokers deliver better, faster, and more relevant advice. The right tech also allows SMEs to spend less time worrying about risk and more time growing their business. At Old Mutual Insure for example, we are significantly investing in our technology capabilities to create a frictionless broker experience, which will in time eventually lead to savings we can pass on to policyholders, as well as improve customer service.
With expert guidance from brokers, SMEs can develop a risk strategy that combines the right cover with proactive risk management—positioning them not just to survive, but to thrive in today’s tough economic climate.