Context
The ABI has published a blog exploring how uninsurance and underinsurance among SMEs can be addressed. The ABI is currently conducting a study into SME uninsurance and underinsurance to build a robust evidence base and develop solutions that fill gaps in cover. The work includes a nationally representative survey (1,000+ SME decisionmakers) and qualitative engagement through focus groups and workshops with experts and small business representatives. The study is aimed at understanding how SMEs approach insurance and manage risk.
Key points to note and next actions
- SMEs make up 99% of all UK businesses and provide around 60% of private sector employment; so, when they are uninsured or underinsured, the impact can be felt across local economies and communities.
- In considering the impact of coverage gaps on small businesses, the ABI suggests that there can be several reasons for the issue to occur such as failure to account for claims inflation, cost saving during financial strain, undertaking work outside policy scope, failures in risk identification, and a lack of insurance expertise.
- The article explores how insurers and brokers can close the SME protection gap, suggesting measures such as:
- making coverage clarity a priority;
- equipping brokers to advise proactively;
- promoting regular reviews;
- countering false economies with education;
- sharing insight on emerging risks; and
- claims preparation.
- SME’s need to be encouraged to know what they are covered for, and what they are not. They need to review their policies regularly and treat insurance as a strategic resilience tool, not just a cost. The difference between an interruption and a closure often comes down to this simple message.