"This presents an opportune moment for advisers to kickstart conversations with their clients about business protection and reiterate the value of their advice."
This optimism comes in spite of the fact that three-quarters (75%) of SMEs now carry at least some external borrowing. This is up from 51% in 2019, when the research was last conducted. Furthermore, over half (54%) of founders or owners have used personal guarantees to secure their company borrowing which, in the event of a default, would pass the financial consequence onto themselves as individuals, increasing the associated risk.
The research shows Covid-19 has shifted perceptions of protection, with 4 in 10 businesses wishing that they had done more in advance with half of respondents also stating that the pandemic had made them more likely to consider insuring their business loans and putting protection in place in the event of the loss of their key people.
The opportunity to help business owners protect their families, employees, and businesses is thus bigger than it has ever been before. 97% of UK SMEs said they are looking to professional advisers for advice so they are in the best position to offer well-designed propositions that can bridge existing gaps in protection and address the fact that so few businesses have previously had the chance to discuss their ability to deal with any future financial uncertainty.
Robert Betts, market development manager at Legal and General, said: “The past two years have been especially tough for small businesses and spotlighted the need for a comprehensive back-up plan. Businesses can no longer rely on government-backed schemes and easily accessible borrowing to protect against an unforeseen crisis.
“Our research has revealed that business owners are ready to discuss protection insurance solutions that could help them negate the financial impact of the death or long-term illness in their business. This presents an opportune moment for advisers to kickstart conversations with their clients about business protection and reiterate the value of their advice. As an industry, we have the tools at our disposable to support these conversations and help advisers protect both a business and family’s financial position.”
