As UK SME's adapt, has their cover kept pace?

By Dave Carey - Director of Mid-Market & Specialty Lines, Commercial Insurance

As British businesses continuously adapt to COVID-19 guidance, the part played by 5.8M Small to Medium Enterprises (SMEs) – who have kept communities and the economy going - has become increasingly crucial.

These businesses are walking a tightrope. SME’s not only have to focus on the short-term challenges and costs associated with keeping staff and customers safe and socially distanced, they also need to adapt to market conditions so they can continue trading in an ever-changing environment.

One of the many things this pandemic has shown is not just how resilient SMEs are, but how nimble and adaptable they can be in the face of adversity. Whether it is a distillery using their equipment to make hand sanitiser or cocktail bars moving to online delivery, SMEs have  found new and innovative ways to continue trading.

This adaptability is to be applauded. But as businesses diversify in the face of economic uncertainty, they must be aware of the new risks involved. Not simply the risk of new product lines or distribution routes, but whether their insurance cover needs to change so they can operate in these new ways with confidence.

For example, if a business only has public liability cover on their premises, what cover is in place now that they deliver? Does their insurance cover off-site incidents (a prang at a traffic light, a slip on a customer doorstep)? These small details can pose a serious risk, particularly to businesses who are already stretched financially.

With continuing economic challenges ahead, it’s understandable that many businesses are looking to tighten their belts. But not updating, or even reducing, insurance cover is a false economy which can leave businesses exposed. This is highlighted by Aviva data which shows that one in four businesses have not updated their cover in over four years. Unfortunately this is not a new problem. Even before the pandemic only 50% of SMEs had adequate levels of cover for their business. More concerning still was the one-third of SMEs that had no cover at all. 

For businesses who have made changes in light of the challenges posed by Covid-19, it is critical that their insurance cover is updated to reflect these.  The good news is that insurance brokers are experts at helping business owners determine the right level of cover they need, ensuring that they don’t pay for cover that’s surplus to requirements, but that if they change their business model, cover is in place to safeguard the future of the business.

This has been a difficult year for so many of us, for so many reasons. For SMEs, their ability to adapt, quickly, to a crisis that continues to evolve has shown once again why they are the backbone of the British economy.

SMEs may still have a maze of challenges to negotiate,  but they should do so with the confidence that their brokers and insurers are there to help them manage their risks and improve their resilience. Working with their insurer partners, brokers can deliver insurance cover that recognises the unique nature of each business, as they adapt to an ever-changing future.