- But if hit with an unexpected £50,000 bill, 28% of business services SMEs said they would go out of business.
- 73% of SMEs across the UK identified new risks that were not present when they started but 82% have not altered their insurance coverage to respond to technological change including cyber threats.
Leading commercial insurer RSA has today released a report, Future Impacts, which assesses the effects of economic events such as Brexit on business growth, as well as the risks that businesses face and how they are managing those risks.
The research found that Brexit is not perceived as a risk by 69% of businesses in the business services sector with 49% stating that leaving the EU will have no impact at all, and 20% saying that it will have a positive effect on their business. This is a little below the average of 70% amongst SMEs more generally across the UK. However, SMEs identified a range of more significant threats which many companies are not sufficiently protected against.
28% of SMEs in business services say they would go out of business if faced with an unexpected bill of £50,000, which is the national average of 28%. Yet 51% of SMEs in this sector are not insured against any of their top three risks, compared to a national average of 58%.
The top three risks UK SMEs identified were:
- Economic uncertainty (35%)
- Increasing market competition (35%)
- Cash flow (31%)
Additionally, almost nine in 10 (88%) insurance brokers see underinsurance as a problem for their SME clients, showing that businesses which do have insurance in place are at risk as well due to their coverage potentially not being sufficient enough to cover the full cost of repairing the damage caused by unexpected issues.
Future risks
RSA’s Future Impacts report also investigates the emerging risks for UK businesses, with 73% of SMEs stating that new risks have emerged since they first started their company. However, little is being done, for example, 82% have not altered or increased their insurance coverage as a result of technological change.
The threat of cyber-attacks, for example, is one of the most prominent emerging risks for businesses. However, while government figures show that two-thirds of large businesses and three-quarters of SMEs had experienced some form of cyber-attack1, RSA’s research shows that only 9% of businesses have cyber cover in place, and only 26% said that they are concerned about the threat posed by a cyber-attack.
Businesses’ lack of protection against cyber threats is echoed by government data, which found that approximately one third of firms had formal written cyber security policies and only 10% had an incident management plan in place.2
Russell White, Schemes and Deals Director, Regions and SME, Commercial Risk Solutions at RSA, said:
“Insurance should be viewed as part of a business’ growth strategy which helps mitigate harmful risks, though over a third (34%) of business services SMEs are not protecting themselves properly because of the perceived cost of premiums. Additionally, 47% of SMEs in business services have not reviewed their insurance in the past year.”
Russell added: “The onus is not only on SMEs themselves to better manage their risks, but also on brokers and insurance providers to proactively raise awareness of the protection gap and help SMEs to better understand the risks they face, and what they can do to protect themselves against them. RSA has devised a number of recommendations demonstrating what insurers, brokers, government and SMEs themselves can do to subvert this trend and help strengthen UK businesses and their contribution to our economy.3”
For more information visit: www.rsabroker.com.