UK SMEs 'taking a gamble' by not having key person cover

Almost two-thirds of the UK’s small and medium-sized enterprises (SMEs) are running the risk of “severe impact” on their day-to-day operations by having no protection insurance for their owners and key employers.
 
That’s according to insurance firm, Zurich, which polled 513 senior decision makers from small firms as part of their ‘SME Risk Index’.
 
The report revealed that 56 per cent believed the death or critical illness of business owners is the biggest risk to a company’s long-term success.
 
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.”
 
Additionally, 45 per cent of senior decision makers feared the death or critical illness of key employees as a major risk to their company’s long-term growth.
 
Half of the Index’s respondents said 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.
 
These potential gaps in the overall structure of a small business were a concern with respondents, with 43 per cent fearing the difficulty in finding replacements of a similar calibre.
 
“These companies rely on the talent, know-how and experience of a few people who are vital for the business success,” added Atkinson.

“In the event of the death or serious illness of one of them, the survival of the entire company would 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.”

Date published 18 Jun 2014 | Last updated 18 Jun 2014