At a glance
- Perceived complexities around emerging markets may put some brokers off advising small firms looking to export, but many insurance products are relatively straightforward to offer to customers
- Brokers capable of offering good advice on exports have a greater chance of cementing longer lasting relationships
- Export businesses have also been shown to be more robust and profitable than non-export businesses
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Reading about the most promising new export markets can be a blur of odd acronyms. First it was the BRICs (Brazil, Russia, India and China) and more recently it has been the MINTs (Mexico, Indonesia, Nigeria and Turkey) and the CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey, and South Africa).
New lists are being drawn up all the time. Peru, the Philippines and Sri Lanka have also been identified as being among the next batch of strong, export-hungry economies of the future.
It has been clear for some time that the economies of the West are growing far slower than those of the emerging economies in Asia, Latin America and Africa, which offer tempting targets for ambitious British exporters.
In fact, they have become impossible to ignore. In 2013, emerging markets’ GDP exceeded that of the advanced markets for the first time.
Yet they are markets that also carry risk. Recent political and civil unrest in Turkey and the Middle East, for instance, highlight the reasons why some UK businesses are nervous about exporting. The perceived complexity of exporting to many different emerging markets may also put some off. Other concerns, such as theft of intellectual property in markets including China add further levels of concern.
These are all reasons why some brokers may feel it is beyond their expertise to advise small firms on exports, but they are missing out if they fail to engage their customers in conversations about exports, says Russell Corbould-Warren, Zurich’s Head of SME Underwriting.
Brokers capable of offering good advice and value on exports have a greater chance of cementing deeper and longer-lasting relationships. Customers who move into exports are more likely to be receptive to cross sales and will have growing sums insured.
Businesses that start expanding their exporting activity extensively into new regions often find they travel more and so are in the market for travel insurance products for their staff. In some emerging markets, this can include kidnap and ransom cover. Export businesses have also been shown to be more robust and profitable than non-export businesses.
“Exports are nothing to be scared of,” says Russell. “Most brokers will be able to provide good cover to SMEs as they start exporting into emerging markets. By asking a few simple questions and drawing out the insurance implications of fledgling exporters’ plans it is relatively straightforward to offer the right cover. Professional indemnity, travel cover, goods in transit – these are all straightforward products to offer.”
Exports are nothing to be scared of. Most brokers will be able to provide good cover to SMEs as they start exporting into emerging markets
Russell Corbould-Warren, Zurich’s Head of SME Underwriting
Brokers can offer useful and valuable insights into certain issues, says Russell, advising on cover for goods in transit extensions as well as key supplier and key overseas customer extensions, for example.
It’s important not to be daunted by the fact that SME owners may approach brokers for advice that is beyond their remit, adds Russell. “You can stop at your comfort zone by giving appropriate insurance advice and point them to lawyers, accountants and other professionals when non-insurance issues get raised,” he says. “Don’t be afraid to say: ‘This is not my bag’.”
They can also point to the extensive advice, research and funding help on exports for SMEs being made available from UK Trade & Investment, he adds.
Brokers can also help clients see the positives, such as the fact that perceptions of risk for new exporters into emerging markets are often overblown. In some respects these markets are less risky than those of developed economies, says Russell. “Buyers of goods in emerging markets tend to be less litigious and Western goods are likely to meet their standards, expectations and local health and safety requirements,” he says.