The good news is that the number of SMEs in the UK is at its highest point since the economic downturn. Many of these are what are called ‘first generation family’ businesses and their numbers have risen dramatically over the past three years – the likes of Barclays Business are tipping them to become significant contributors to the UK economy over the next few years.
The bad news is that as the number of SMEs continues to rise, statistics recently released by AXA Business Insurance suggest that the majority of them are, probably unknowingly, operating without the commercial insurance cover they need.
The even worse news is that AXA estimates that over half a million are potentially breaking the law in the process.
According to AXA, over half of those requiring Employers’ Liability cover by law have failed to buy it while 43% of those meeting with the public or clients or suppliers neglect to protect themselves against any accidents or damage they may be responsible for. More than 50% of those paid by clients for business advice fail to buy professional indemnity cover.
I doubt that many of these small businesses are deliberately trying to flout the law. It’s more likely that insurance is seen as one of those bits of admin that they’ll get round to but in the early days, they’re more focused on actually getting business through the door and developing a healthy cash flow.
The trouble is, not having the right insurance can have big consequences on a small business. Claims for liability can run into millions of pounds so not having cover in place is putting all they’ve worked towards at risk. More research from AXA revealed that almost a quarter of SMEs have had an employee or former employee claim against their employer in the past five years.
Many of these small businesses may well be your clients. You’ve helped them find the right mortgage deal and probably helped them to sort out their household insurance as well as other levels of protection. Many of them may well be operating their business from their home.
Why not help them sort out their commercial insurance needs so that the source of the money they need to pay the mortgage and household bills is properly protected?
If they have clients coming to their home office – no matter how infrequently – or if they come into contact with members of the public, they’ll need public liability insurance to cover them if they cause injury or damage to a person or their property during the course of their work.
If they are providing professional advice to their clients then just like mortgage intermediaries, they should really have some level of professional indemnity insurance if their professional body doesn’t demand it.
If they are running a shop or a small manufacturing business or choose to run their business from an office, you can still help them source office insurance and tradesman liability insurance.
General insurance providers that you use for household insurance such as The Source will also have arrangements in place with their insurance partners so that they can help you access top quality commercial packages for your clients.
And in the post MMR world where time is becoming increasingly precious, you don’t have to take your eye off your core business as some, including the team The Source, will offer a referral service for commercial insurance just as they do for household or protection so you can be confident that your client is in a safe pair of hands and that you’ll still receive your commission.
Don’t let your clients that run their own SME business fall foul of the law or put their business at risk simply because they haven’t got round to sorting out their commercial insurance needs. Helping them protect their business as well as their home could also help you to become a much needed source of support and advice going forward.
Kevin Paterson is managing director of Source Insurance
