SME buying behaviour is shifting
Three trends are reshaping how Australian SMEs approach insurance in 2026, each with direct implications for how brokers structure their service. The signals are visible across the industry, including in commentary from rural and contractor markets.
Trend 1: Bundled policies and their limits
More SMEs are gravitating toward bundled business packages – single policies combining property, business interruption, liability and other covers. The appeal is straightforward: one renewal date, one bill, less administrative overhead. The problem is that bundles carry standardised limits and sub-limits that frequently don’t match the actual risk profile of a specific business. Important extensions – cyber, management liability, specialised BI covers – are often excluded or only lightly addressed. General Insurance Agencies’ 2026 summary reinforces that underinsurance across property, BI and emerging risks remains widespread, even among businesses that believe they are adequately covered.
The broker’s role is to unpack what the bundle actually contains, what it doesn’t, and when a bespoke program is justified. That conversation is harder to have after a claim.
Trend 2: Contract-driven demand for higher limits
Contractual insurance requirements in commercial agreements, leases and subcontractor arrangements are pushing liability limit demands upward. Head contractors, government agencies and corporate clients are increasingly mandating $10 million or $20 million public and products liability as a condition of engagement, along with specific extensions – principal’s indemnity, waiver of subrogation, jurisdiction clauses. The same pattern can play out for rural contractors being asked for higher limits before gaining access to certain jobs. Construction, logistics and professional services show similar dynamics.
SMEs sign contracts with insurance obligations they don’t fully understand and discover the gap when a claim is declined or a contract is at risk. Brokers who make contract review a standard part of their service – asking clients to share tenders, leases and major agreements before commitments are made – can identify and address mismatches before they become problems.
Trend 3: Underinsurance across the board
The underinsurance problem persists despite years of high-profile catastrophes and cyber events. Many SMEs still carry outdated or approximate sums insured for buildings, plant and stock; BI periods too short for today’s rebuild and recovery timelines; and little or no cover for cyber incidents or management liability. Standard renewal conversations aren’t shifting behaviour fast enough.
The current soft market in property and some liability segments creates a practical opportunity. Where rates are lower, the saving can be redirected into higher limits, longer BI periods or cover extensions that were previously declined on price grounds. Howden’s analysis supports using the current rating environment as a window to improve program quality, not simply reduce the invoice.
Four practical focus areas
Treat bundles as a starting point, not a destination. Explain key limits, exclusions and sub-limits in plain English and assess when add-ons or stand-alone covers are warranted.
Make contract review a standard service. Ask clients to share tender documents, leases and major contracts. Map required insurances against current programs and flag gaps before commitments are made.
Use soft market conditions to correct underinsurance. Reinvest rate savings into higher limits, longer BI periods and cover extensions – and document that conversation for the file.
Raise emerging risks proactively. Use current cyber and climate-risk news as entry points to revisit previously declined covers, particularly where contractual or regulatory pressure is growing.
SMEs are under pressure from volatile costs, climate exposure, contract demands and evolving risk expectations. Brokers who deepen their advisory role – rather than simply chasing price – will be best placed to retain and grow their SME books through the rest of 2026 and into the next cycle.
Better Broker Network provides members with placement support, peer guidance and practice management advice for exactly this kind of complex SME work. Learn more at betterbroker.net.au or explore the full offer at betterbroker.net.au/the-better-broker-offer.