Research commissioned by AXA Insurance in association with the British Chambers of Commerce (BCC) reveals that over half a million people[1] are uninsured in their workplace and only a third of businesses[2] (34%) understand their legal requirement to cover employees through employers’ liability insurance.
Alongside this, a worrying number of businesses are looking to reduce or cut out insurance cover altogether as the recession bites. In the last year, around 15% have considered cutting back on their insurance while five per cent have already cut back their level of insurance cover. When it comes to making cuts to save money, reducing the level of insurance cover is almost as likely to be a target as the company’s tea and coffee (with 35% and 39% respectively).
However, AXA warns this is a dangerous false economy as 13% of businesses have less than £1,000 disposable cash and 48% have less than £10,000. This means that without proper insurance, companies would be left extremely vulnerable in the event of a claim – which around one in nine[3] businesses are likely to make each year. Average claims costs for the three most common claims are around £49k for business interruption, £36k for fire and £3.5k for theft.4
(Mis)Understanding Insurance
The research carried out among hundreds of British businesses across all sectors shows that ignorance is rife. Aside from nearly two thirds not understanding their legal obligations in relation to employers’ liability cover, only 11% of employers understand that if a company van or other vehicle is made available to employees then the employer is legally obliged to insure it. Only 37% understand completely what premises insurance is for while this figure drops to 26% for equipment and contents and 30% for public liability.
Business Interruption (BI) cover, which will pay out if you are unable to operate as normal or have to close your business due to an insurable event, was misunderstood with nearly a third (31%) having no or little understanding and 15% wrongly thinking that it is legally compulsory. 14% wrongly think that BI is available if employees can’t get to work because of severe weather, and only 24% realised that BI could cover you if you had to close your business because of a power cut5. Seven per cent also wrongly believed that they’d be covered if they had to shut their business because employees got swine flu and six per cent if business was lost because of the recession.
Less than half of employers have read their insurance documentation (49%) and only 23% keep it in a secure filing system either on or off site. Four per cent of employers admitted to not having a clue on what they are actually covered for.
Employee Viewpoint
Despite the fact that employers have gaps in their understanding, 89% of employees were aware of insurance covering them for accidents at work, although over a third (36%) had never been given any information about their employer’s insurance programme. AXA advocates that employers continue to prominently display their Employers’ Liability Certificate as well as making this available electronically.
Four per cent wrongly believed they’d be covered for discriminatory behaviour from colleagues and three per cent for accidents on the way to and from work.
Doug Barnett, head of customer risk management at AXA says: “These statistics should be a wake up call to all businesses and the insurance industry alike. With the economy as precariously positioned as it is at the moment, the last thing needed is more businesses needlessly going to the wall because they are not properly insured.
“We have taken the findings of this research very seriously and have produced materials that can be used by AXA to help get our message across to business owners and management that insurance is an absolutely vital component of any successful business.”
