At a time when the British businesses are calling on the Chancellor to deliver a Budget that will stimulate business growth and investment and simplify the tax system, Aon’s new research suggests many businesses should be concerned more about the issues closer to home – with the vast majority leaving their business health and continuity open to a range of common everyday risks with potentially severe consequences.
In a nationwide poll of 766 decision makers from SME businesses, Aon explored the types of insurance cover businesses had taken out. The findings reveal a ‘protection gap’ of titanic proportions, which far outstrips the existing level of market concern that has been expressed over consumers not having enough insurance.
The business insurance walk of shame
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The most commonly held insurance policy among businesses surveyed was professional indemnity – but even here, only 35% of businesses had taken out cover that protected them from being sued for negligence.
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Only one in three businesses (33%) said they had cover for employee injury or third party liability – despite an estimated 629,000 SME workers reporting an accident at work in 2013/14.*
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Only 28% of SME businesses had taken out cover for damage to property, whether a result of extreme weather or crime. In London this stood at 27% - despite London experiencing 30,466 incidents of crime per 1,000 premises, the highest rate of all regions in England and Wales, which was driven by theft.**
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Perhaps even more alarming, less than one in five businesses (17%) had cover for health and safety issues – and only 15% had cover for business travel; a surprise given businesses expect to secure up to 50 per cent of their revenues from overseas trade in the next five years.***
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Finally, only a very small proportion of businesses had insurance in place to tackle many of the major reputation risks that are being widely discussed in the industry. Just a week after the Financial Conduct Authority released its Business Plan and Risk Outlook for 2015 - where technology and data issues were listed among its most pressing concerns - only 7% of the businesses that Aon surveyed had cover to protect their intellectual property and a mere 3% insurance to protect them against cyber attacks. In addition, just one in 50 businesses (2%) had cover to help them deal with a crisis – whether this is terrorism, piracy, political risk or product contamination.
Chris Lee-Smith, MD, Aon Affinity, Commented:
"With the Budget looming on Wednesday, it is of course natural that businesses on focusing on what Central Government will do to foster an environment that will help businesses grow and prosper. Our research suggests businesses need to focus within to assess the risks they face and ensure they have contingencies to meet these risks including the right mix of insurance coverage.
As the UK economy continues to recover, businesses of all sizes have to cope with change – whether this is market conditions, supply chain dynamics or the evolving digital landscape. All these changes throw up opportunities and risks. As the leading insurance partner for the business sector, we would encourage all business leaders to set up and manage a risk register so they can mitigate the prospect of growth plans being derailed by unforeseen events.”
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