Around two thirds of the UK’s SMEs (65%) are taking a huge risk by not securing essential protection insurance for the owners and key employees, according to survey results published in Zurich’s latest SME Risk Index.
The shocking finding in this quarterly report means many small and medium businesses are potentially putting the future of their enterprises in jeopardy by not preparing for certain outcomes. Having key person protection insurance can cover the loss of profit along with the costs of having to recruit and train a replacement member of staff.
These statistics are made even more harrowing as 56% of SME leaders surveyed by YouGov believed death or critical illness of business owners was the biggest risk to a company’s long-term success. And 45% highlighted the death or critical illness of key employees as a major risk.
SMEs are taking a gamble
Chris Atkinson, Retail Protection Proposition Manager at Zurich UK Life, said: “These are stark findings which show too many SMEs are taking a gamble by not taking out protection insurance for their business owners and key personnel.
“These companies rely on the talent, know-how and experience of a few people who are vital for the business success. In the event of the death or serious illness of one of them, the survival of the entire company could be at risk.
“It is crucial that these companies take adequate measures, such as Key Person insurance, to be able to cope with these tragic events, which sadly are not as rare as we think.”
Half of the respondents believed death or series illness affecting key staff members would create a significant gap in the business management structure. Other results highlighted that 44% believed this could lead to a significant skills shortage and 43% were concerned about the difficulty in finding a replacement of similar calibre.