Commercial News

SME business protection gap highlights intermediary opportunities

Rozi Jones -
|
31st October 2019
life ring insurance protection
"Nearly two-thirds of small businesses said they were happy to be contacted by a financial adviser."

Advisers play a critical role in protecting SMEs with business insurance, new research from Legal & General shows.

Its research found that nearly three-quarters (73%) of SMEs who took out a business protection policy did so after seeking advice from an intermediary.

Businesses which use a financial adviser are also much more likely to be prepared for a critical event such as the death of a key employee.

More than three in four SMEs that use an adviser (78%) had a business continuity plan in place, compared to 57% of other small businesses. This was also the case when it came to business protection policies – 71% of SMEs which had sought advice had a policy that would enable them to buy back shares if a director passed away, compared to only half (52%) of SMEs that do not use an adviser.

Just half (51%) of SMEs were also prepared to spend more than £100 a month on life or critical illness insurance, but this rose to more than two-thirds (67%) for businesses that were using a financial adviser.

The report also showed that there were still opportunities for advisers to encourage more SMEs to take out cover. A fifth (20%) of small and medium-sized companies that didn’t have any business protection hadn’t taken out a policy because they either didn’t have enough information about it or because no one had advised them to do so. More than half (51%) didn’t have a business protection policy because they ‘did not see the need for it’ or did not understand how it could help their company.

However, nearly two-thirds (63%) of SMEs said they were happy to be contacted by a financial adviser, presenting an opportunity for intermediaries to talk to these companies about the importance of business protection.

Richard Kateley, head of intermediary development at Legal & General, said: “Intermediaries are already at the forefront of protecting families across the UK, but our research shows that they’re also championing the importance of protection for Britain’s small businesses. Almost three-quarters of SMEs that took out a business protection policy did so after receiving advice, whether that be from an accountant or financial adviser. SMEs that have engaged with a financial adviser are also much more likely to be prepared in the event of a key member of staff falling ill or dying. This could be through a business continuity plan, or an insurance policy such as share protection to help them retain control of their company if a key member of staff passed away.

“Businesses often don’t think twice about insuring machines, vehicles, computers and offices, but they often forget about protecting their people – arguably their most important asset. As these figures show, small companies across Britain remain unaware of how a business protection policy could benefit them. For advisers, there is a clear opportunity to help change the status quo and ensure more SMEs – companies that are the backbone of Britain’s economy – are better prepared should they lose a critical member of staff. Nearly two-thirds of small businesses said they were happy to be contacted by a financial adviser.

“At Legal & General, we’re committed to working together with intermediaries to ensure they have the support they need to keep Britain’s small businesses protected.”

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