Aviva UK to SMEs: 'Speak with your broker'

Recommendation comes amid threat of underinsurance

Aviva UK to SMEs: 'Speak with your broker'

SME

By Terry Gangcuangco

Aviva UK is urging small- and medium-sized enterprises to chat to their brokers amid the increased treat of underinsurance as the country continues to grapple with challenging economic headwinds.

“Our research shows that many SMEs are in the dark about how inflation, supply chain disruption, and other macroeconomic and global issues can impact their own business in the event they have to make a claim,” said underwriting automation head Jason Chambers, who highlighted Aviva’s commercial insurance tool that uses data analytics in helping identify potential gaps in cover.

“We want to highlight the risk of underinsurance that SMEs face, and encourage them to speak with their broker, who can advise on the necessary covers and levels of insurance to help protect SMEs through this period of uncertainty. But we’re not just talking about it – our underwriters are working with brokers to proactively identify which of their SME customers are at risk of underinsurance.”

According to an Aviva-commissioned survey of 502 businesses this month, 32% of SMEs do not take inflation or supply chain issues into consideration when reviewing their sums insured. The high inflation rate, for instance, could mean increased replacement costs for a company’s stock or machinery.

The study, conducted by YouGov, also found that 10% of the respondents believe they could not survive if they had to shell out up to £10,000 towards a claim that was not fully insured. Meanwhile, 31% do not have employers’ liability insurance.

Below are the types of insurance that the participating SMEs have.

Insurance type

Percentage

Public liability insurance

77%

Employers’ liability insurance

69%

Business contents insurance

55%

Professional indemnity insurance

53%

Commercial property insurance

45%

Product liability insurance

32%

Directors’ and officers’ insurance

32%

Business interruption insurance (including wages)

31%

Cyber Insurance

21%

 

“SMEs have faced a tumultuous couple of years, and have come through the challenges posed by COVID, only to face some of the most challenging economic headwinds of the last few decades,” declared Chambers. “SMEs will obviously be paying close attention to their expenditure as a result.

“But cutting corners on insurance leaves them exposed to considerable risk: we estimate that 50% of UK businesses are underinsured to some degree, and 45% of policies with buildings have at least one premises suspected to be underinsured by 20%. In the event of a claim, this could really impact a business’s ability to stay afloat.”

Aviva added that 42% of SMEs use their brokers to help when reviewing sums insured, but 21% turn to their accountants instead.

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