Almost two thirds (65%) of small and medium sized enterprises (SMEs) risk severe impact on their operations by having no protection insurance for their owners and key employees, warns leading insurer Zurich.
This is one of the latest findings of Zurich’s SME Risk Index, a quarterly survey measuring the perceived level of business risk faced by SMEs.
More than half (56%) of the SMEs’ decision-makers surveyed by YouGov for the insurer believe that the death or critical illness of business owners is 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.
Half of the respondents who said that the death or critical illness of a business owner or key employee would have a negative impact on the business also believed that it could create a significant gap in the business management structure.
44% said this could lead to a significant skills shortage, and 43% were concerned about the difficulty in finding a replacement of similar calibre.
Chris Atkinson, Retail Protection Proposition Manager, 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.”
As well as covering the loss of profits suffered by the business until a replacement is found, Key Person protection can also pay for the costs of recruitment and training of a replacement.
