How can you stop clients switching and avoid the ‘honeymoon effect’?
Vero’s 2025 SME Insurance Index found that the level of satisfaction businesses have with their broker has dropped – with more businesses now feeling neutral about their broker. In addition, the Index also shows that micro businesses experiencing declining revenue have higher levels of dissatisfaction – an issue in difficult economic times.
But there are ways to make client retention a focus, and it starts with understanding client behaviours – including why businesses switch between brokers, why mixed channel usage has increased and why the ‘honeymoon effect’ may be a factor.
What causes businesses to switch brokers?
Some reasons include:
- Cost concerns: Many businesses cited higher fees or finding lower-cost brokers as primary reasons for switching
- Service gaps: Communication issues and dissatisfaction with advice or expertise also influenced these decisions.
- Emerging competition: The availability of online brokerages appealed to many businesses that switched.
In addition, larger businesses are more inclined to switch brokers, while broker loyalists – those who have never switched – tend to value the peace of mind and service quality provided by brokers. This highlights the importance of demonstrating value and maintaining open, effective communication.
Hear from Australian business owners about broker performance and retention:
Increased mixed channel usage
Another finding from the 2025 Index is that there is a consistent trend toward businesses using a mix of channels to purchase insurance. Heavy reliance on brokers has declined, but so has the number of businesses not using a broker. That suggests a proportion of Australian businesses use brokers for at least some of their insurance needs, with other needs fulfilled through different channels.
It’s worth noting that larger businesses are more likely to be light or moderate broker users, instead of choosing to exclusively use brokers or only purchasing direct. Larger enterprises, which often have more complex insurance needs, need brokers with a service offering that can be integrated across various risk portfolios.
The ‘honeymoon effect’
While broker satisfaction levels reached a record high in 2024, they have decreased this year. With dissatisfaction remaining stable, this decline can be primarily attributed to an increase in businesses feeling neutral about their broker.
Businesses that started working with a broker one or two years ago score notably lower when it comes to satisfaction with their broker compared to newer clients or those in longer-term broker relationships.
The findings seem to demonstrate what we’re calling the ‘honeymoon effect’ – a situation that can occur in working relationships when satisfaction drops after the first year of engagement. This suggests a need to revisit service strategies beyond the initial onboarding phase to maintain high levels of satisfaction throughout a client relationship.
Trusted expertise is key
The Index reveals that the number of businesses valuing the expertise of their broker has increased, with 88% saying knowledge and advice are among the key reasons they work closely with their broker (up from 81% last year).
Building strong working relationships fosters loyalty. Businesses that have never switched brokers often cite satisfaction with service and a trusted relationship.
I think the one word that sums it all up is ‘relationship’. I can talk to them bluntly. They know my business. I know them. They don't treat me as a number.
– William, Restaurants, Medium Business, Heavy Broker User
Take action today
The findings from the Vero SME Insurance Index present significant opportunities for brokers aiming to retain clients, attract new business and combat the challenges of underinsurance.
- Address the ‘honeymoon effect’
Develop retention strategies to provide consistent service. Make sure to schedule check-ins and follow-ups, and offer tailored support beyond the first few cycles - Highlight holistic risk management
Help clients see their insurance needs as interconnected. Educate them on the value of having a broker oversee their portfolio and provide a comprehensive risk strategy. - Show value through expertise
Clearly demonstrate knowledge, provide actionable advice, and use case studies or claims scenarios. For instance, explaining why understanding intricate policy terms at claim time can be a huge benefit. - Communicate clearly and often
Regular updates, transparent discussions about policy changes and proactive guidance help build trust, especially for businesses facing financial stress
For more insights into the behaviours and attitudes that shape the insurance decisions of Australian businesses, watch the Vero SME Insurance Index Webinar or download the full report today.
AAI Limited ABN 48 005 297 807 trading as Vero Insurance (Vero) has commissioned the 2025 SME Insurance Index Report. The information in this article and Report 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, resulting from any reliance upon on 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 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.
