Business interruption claims stemming from climate change issues have risen by almost 60% in the last four years, according to research from AXA.
The report, written by Professor David Crichton, claims small businesses will face "dire consequences" if they continue to ignore the importance of climate change.
Just 26% of the small businesses surveyed perceive climate change as a "real threat" to business continuity.
Only a meagre 8% had received any form of flood risk warning, prompting 46% of respondents to suggest that climate change had been "blown out of proportion".
Conservatives and Liberal Democrats have supported AXA's calls for the government to work more closely with insurers to tackle climate change issues. This when Labour proposes to slash spending on the maintenance of flood defences across the UK.
Peter Ainsworth MP, Conservative shadow secretary of state for environment, food and rural affairs, said: "The insurance industry can help SMEs recognise the obligations posed by climate change. However, it is up to government to make clear the opportunities."