Is your Insurance a hindrance or benefit?
The UK insurance industry is the biggest in Europe and the fourth largest globally, but how seriously do you take your insurance? Whether you’re an individual insuring your home or motor, a business turning over £100k or a national business with 250 employees, insurance should be at the forefront of your mind, but is that the case? If you’re like most individuals, then house and car insurance are necessities you have to pay for because it’s a legal requirement, but for businesses, it should be one of the main focuses for protecting your business.
Why do people negate their insurance?
As insurance brokers, we deal with various people and businesses. The difference in risk awareness is significant, and the reason for that is the whole point of insurance claims! Businesses that have never claimed and feel like they are likely not to do not risk aware and take their insurance as a necessary evil, as opposed to the thing that is most likely to save your business, should the unexpected occur.
UK Insurance Claims Numbers
UK insurers pay out around £22 million in claims per day in business insurance claims. With this figure being high, it outlines the importance of the right policy to a business. 99.9% of businesses in the UK are SMEs, but up to 44% don’t have insurance. Professional Indemnity claims are the most frequent within the UK, making up a quarter of all claims. These claims vary from breach of copyright to professional negligence.
What’s the next significant threat to UK businesses?
44% of businesses don’t take out insurance that their owners will be of the mindset, “it won’t happen to me”. Go back to January 2020, and as a company, I came to you with a policy that covered you for any money lost if the country was to go into lockdown due to a national pandemic and all businesses across the UK were forced to close their doors for the foreseeable. You’d laugh me out the door, right? It will never happen, well, it did and does. The policy we, as an industry, hear this on is cyber insurance. Cyber incidents are the biggest SMEs in the UK, with 34% seeing the risk in losing out to Cybercrime.
How prevalent is Cyber Crime?
Despite Cyber being the highest rising claims number within the UK insurance industry, only 40% of small businesses and as little as 17% of micro-businesses are covered by Cyber Insurance. Due to the pandemic, more companies moved to a hybrid working environment and moved more operations online, and therefore the risk of cybercrime increased, yet the take-up is still low. People view Cybercrime as in the movies, something from the Matrix, a person sitting behind a computer, passing over multiple screens, cracking codes and passwords to get access to the Nuke codes. This couldn’t be further from the truth, and cybercrime resulted in a £3.1BN loss in 21/22.
What should your broker be doing for you?
With all the above now at the forefront of your mind, what should your insurance broker do to reduce the impact of any losses? Over 50% of SMEs in the UK could be underinsured, meaning if a claim occurred, you would be subject to being paid less for your claim than needed. A good broker, regularly goes over these sums insured to ensure they adequately cover your business and move in line with your business.
Regular face-to-face meetings at Mid-Year and Renewal to ensure you get the best out of your policies. Building a relationship with your broker is vital in getting the most out of your insurance, and emails right before renewal should not be seen as adequate practices. Remember, regardless of the size, your insurance should be a priority in your business.