Commercial insurers may be affected as business owners could have a reduced budget for insurance if they are struggling for custom amid coronavirus recession
Commercial insurers should consider providing Covid-19 specific insurance policies for struggling SMEs as 50.3% of these companies are very or extremely concerned about the continuing detrimental impact of coronavirus on their business, according to research by data analytics firm GlobalData.
GlobalData suggests that commercial insurance purchases are “set to stall as businesses struggle” unless insurers “can offer products to reduce those fears”, such as Covid-19 cover.
According to its 2020 UK SME Insurance Survey, more than half of UK SMEs are very or extremely concerned about losing business due to the Covid-19 pandemic, while 50.3% are very or extremely worried about the virus’s continuing impact. Around 73.9% are concerned to some extent about the ongoing effects of coronavirus.
Over half (53%) of medium-sized businesses are now concerned about their ability to conduct international business, while only 13.5% of SMEs said they are not concerned about losing business due to coronavirus – the majority of these respondents are sole traders or micro businesses.
Ben Carey-Evans, insurance analyst at GlobalData, said this stance from SMEs could provide opportunities for insurers looking to provide specific Covid-19 insurance.
He continued: “The increased concern surrounding losing business due to Covid-19 will only be positive news for insurers looking to offer Covid-19-specific insurance.
“The rising concerns suggest there is a significant market for such policies, but with the timescale a complete unknown, it is a risky and potentially very expensive product for insurers to offer. This is supported by our consumer survey, as 45.9% of medium-sized businesses are concerned they are underinsured.
“There appears to be an opportunity for Covid-19 protection. The economic downturn resulting from the pandemic will lead to continued loss of business among SMEs, which will have a direct knock-on effect on commercial insurers as they will have a reduced insurance budget. Insurers therefore need to balance whether they should risk offering pandemic-inclusive commercial insurance products to make up for a decline in gross written premiums.”