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K SMES ARE FACING

SMEs account for three-fifths of the employment and around half of turnover in the UK private sector , so addressing the problem of underinsurance is critical if we are to unlock the potential of SMEs and support growth in the national economy .

The repercussions of underinsurance cannot be underestimated . Underinsured companies often face disastrous financial consequences following business-critical events such as fires , floods or legal action which leave them unable to operate . Added to this , SMEs often operate on tight budgets and margins , which not only risks their survival but , at times , even the personal finances of their founders . Given that the core purpose of SME insurance providers is to ensure the future of these businesses , it ’ s time for the sector to take action .

So , why do so many SMEs lack this vital protection ? And importantly , how can this problem be addressed ?

Why underinsurance exists

Small business owners are experts in what they do but can be less familiar with the world of insurance – an industry which can often be unnecessarily confusing and complicated . For newly launched SMEs and solo founders , this is especially true , as they often ‘ wear all the hats ’ in the business , managing everything from finances to marketing to customer service .

When insurance policies are rife with jargon and lack transparency , SMEs may be shoehorned into generic policies that fail to address their specific needs . Purchasing the right policy with the appropriate level of cover is therefore less likely as a result .

The issue isn ’ t just confined to start-ups ; it can affect growing SMEs as well . As small businesses change and adapt quickly , their insurance policies need to grow with

ADDED TO THIS , SMES OFTEN OPERATE ON TIGHT BUDGETS AND MARGINS , WHICH NOT ONLY RISKS THEIR SURVIVAL BUT , AT TIMES , EVEN THE PERSONAL FINANCES OF THEIR FOUNDERS .

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