Growing Number of SMEs See Themselves “Too Small” for Insurance, Says Brisco Business Insurance
Many SMEs reduced their coverage during lockdown, but interestingly many decided not to increase it when business picked up again, says Dean Laming, director of Brisco Business Insurance.
London, Aug. 09, 2022 (GLOBE NEWSWIRE) -- SMEs (small and medium-sized enterprises) without business insurance are on the rise, while many that do have cover fail to review it when business changes, a recent survey commissioned by Allianz Commercial has revealed.
Of the sole traders and SME decision makers that took the survey, the main reason for not insuring their enterprise was down to believing that their business was too small (47%). The second most common reason was due to remote work (42%), followed by having no customers visiting the premises (34%) and not having much to insure e.g., having no premises or vehicles (33%).
In the UK, it is only mandatory for businesses with staff to have employers’ liability insurance and those with vehicles to have motor insurance. However, SMEs still struggle to recover from a loss without an insurance payout, Allianz pointed out. Even for business owners who have a policy in place, the level of compensation they can receive is conditional on the amount of cover they purchased.
The results also showed that between April 2021 and 2022, a large proportion of SMEs changed the way they ran, with 19% increasing the number of products they offered. Moreover, 16% altered the nature of their products or services, and another 16% returned to the office or shop.
Just 41% replaced their insurance policy to better suit their changed circumstances though, while the majority (52%) did not. This is contrary to lockdown trends of 2021, which saw 20% of SMEs work remotely, 17% reduce the products and services they offered, and 15% make staff cuts. 48% changed their insurance cover to reflect these changes, but only 41% did so this year. This includes both traditional business and specific agency insurance policies.
“Many SMEs reduced their coverage during lockdown, but interestingly many decided not to increase it when business picked up again,” says Dean Laming, director of Brisco Business Insurance.
“What this means is they risk becoming underinsured if they don’t adjust to the pre-pandemic levels of payroll, stock, and profit, which isn’t a good idea in the long term. If they need to claim but their level of cover doesn’t coincide with their activity levels, they could be shooting themselves in the foot when it comes to receiving compensation.”
Small and medium-sized enterprises account for 99.9% of the 5.6 million businesses in the UK, making it no small issue. Allianz found that business interruption was the focal point for SMEs in 2021, while just 17% of respondents deemed it as the main threat this year, falling behind inflation (33%), cash flow (29%), and competition (27%).
In addition, the survey found that SMEs tended to be overoptimistic about how long it would take them to recover from an unforeseen event, with 69% believing that their business activity would spring back to its current level within 12 months if their property was destroyed by fire.
However, two years is a more realistic timeframe to get back to pre-loss levels when the work involved is taken into account, such as cleaning the site, making repairs, replacing equipment, retraining staff, winning back customers, dealing with environmental risks, and getting planning permission.
Laming stresses the importance of making sure that SMEs are adequately covered against legal and compensation costs, in addition to property damage, employee injuries, and more:
“As a rule, the indemnity period for business disturbances should be two years for SMEs in order to account for rebuilding the supplier and customer base,” says Laming. “When activities restart after the indemnity period, sums insured might change for your business property and contents, so you should review your policy limits.”
Brisco Business Insurance now has an insurance platform for SMEs to compare company policies from top insurance firms, supplying quotes for over 1,500 various trades for seven sectors: property owners insurance, shop insurance, office insurance, surgery insurance, pub insurance, restaurant insurance, and tradesman insurance.
Each trade has its own unique risks, with a plumber having different risks to that of a shop owner or architect, so it’s critical to get cover that tailors to each industry.
“Our goal is to help people throughout the UK to find the right business insurance for them, which means finding it at the appropriate rate with minimum fuss. That’s why we’ve developed our quoting tool to help SMEs look for comprehensive packages in the easiest way possible.”
The insurance brokerage offers SMEs packages that cover all aspects of business, including public liability insurance, employees’ liability insurance, product liability insurance, and professional indemnity insurance.
To find out more about what Brisco Business Insurance can offer for small and medium businesses, visit https://briscobusinessinsurance.co.uk/ .
Brisco Business Insurance Chancery House, St Nicholas Way Sutton London SM1 1JB United Kingdom 0208 655 3125 https://briscobusinessinsurance.co.uk/
