No business is immune to risk. Whether its business interruption, liability or cyber incidents - having the right cover in place has never been more important.
This is especially true for many small and medium-sized enterprises (SMEs), the backbone of our economy and representing 99% of UK businesses. New research we commissioned to Public First reveals a stark reality - large numbers of SMEs are uninsured or underinsured. For many, essential protection which could mean the difference between survival and closure, has slipped into the background instead of being central to their resilience.
While 48% of respondents to Public First’s nationally representative survey said their business had a physical premises, of those only 23% had business interruption insurance. Similarly, 57% have portable electronic equipment but only 31% have commercial contents insurance. And 57% of respondents said they had software or cloud services, but only 29% had cyber protection insurance.
The issue extends beyond a lack of cover. Many SMEs are not reviewing their insurance needs regularly. Only half of respondents had reviewed either the type or level of cover they had in place in the past 12 months, yet their businesses and risk profile may have changed during this time. This reinforces the protection gap and concerns that insurance is too often seen as something that is purchased to meet a requirement, renewed annually, and only scrutinised closely when something goes wrong.
How can we change this perception so that insurance is seen as a smart purchase to bolster your resilience?
Improving awareness and understanding of these issues to boost SME resilience is key. That’s why we developed a new SME Insurance Guide: what every business needs to know, as a first step to ensuring that businesses can make informed decisions about their cover. The guide is designed to help business owners better understand the risk they face, the types of cover available and how to buy cover with confidence.
But improving resilience can’t fall on one group alone, and we recognise the role we play in bringing the sector together. As the definitive voice of the insurance sector, we’ll be convening industry representatives, SME voices and government officials to drive conversations forward, explore how to put recommendations into practice, and underline the shared responsibility to strengthen SME resilience.
Bolstering resilience requires a coordinated effort, from government, industry bodies and insurers. The government has a role to play in creating an environment where small businesses can thrive – whether that is through clearer guidance, stronger public awareness campaigns or improved signposting to help SMEs spot risks earlier, before they cause irreversible harm. Insurers, brokers and trade bodies, as well as local business networks also play a vital role as trusted first points of contact. They can help to bridge knowledge gaps and ensure businesses can access reliable, practical support. By working together to raise awareness, simplifying information and ensuring the right guidance reaches SMEs, we can make meaningful progress in reducing the protection gap.
The aim of our guide is not to overwhelm, but to empower. Insurance works best when it is understood and its value is clear. By working together to equip SMEs with clear, relevant information we can help close the protection gaps and ensure that businesses are more resilient to unexpected shocks.
