New research by insurer RSA highlights the alarming extent of SME underinsurance and the serious disconnect between SMEs’ understanding of emerging risks and the actions they are taking to protect themselves.
The problem is not that SMEs deny the threat posed by emerging risks—it’s that they neglect to update their insurance cover to protect against the reality of emerging risks. According to this recent industry research, 73 per cent of SMEs recognise that there are new potential risks to their business that were not present when they first opened, yet 82 per cent of them have not altered or increased their insurance cover to defend against these risks. What’s worse, only 14 per cent of SMEs plan to increase their amount of cover in the next 12 months.
The fact that 28 per cent of SMEs say they would go out of business if faced with an unexpected bill of £50,000 helps illustrate the disconnect between understanding and action. According to PricewaterhouseCoopers, the average cost of a small business’ cyber security breach is £75,000-£310,000—well above the £50,000 that would put more than one-quarter of SMEs out of business. And whilst SMEs identified the following as their top three risks, only 42 per cent are insured against them:
1. Economic uncertainty
2. Increasing market competition
3. Cash flow
Whilst understanding and acknowledging the reality of the threats facing your business is important, it is all for naught if you fail to actually take action to protect against those threats.
A-Plan is here to help. To review your cover and ensure there are no gaps that expose your business to undue liability or emerging risks, please contact one of our commercial branches today.