Brokers are therefore vital for providing advice to protect businesses through economic headwinds
Small to medium-sized enterprises (SMEs) are being left open to significant levels of uninsured risk due to the UK’s challenging economic environment, Aviva has warned.
According to the insurer’s research, 32% of 502 SMEs surveyed in September 2022 did not consider inflation or supply chain issues when reviewing how to insure their business.
As a result of inflation, Aviva said that cover protecting businesses’ buildings and physical assets – such as stock or machinery – would likely need updating to keep pace with the increased costs of replacements.
Only 28% of SMEs have not reviewed their sums insured in the last year, however.
Aviva’s head of underwriting automation Jason Chambers said: “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.
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“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%.”
The insurer’s research further highlighted that 19% of SMEs haven’t reviewed their business interruption (BI) cover in the last two years.
Around 17% of SMEs also potentially do not have employers’ liability (EL) insurance, which is mandatory for firms that employ people.
Despite this, 91% of SMEs are confident they have the right cover in place.
Aviva therefore suggested that brokers have a key role to play in ensuring customers purchase the correct cover.
Chambers added that brokers can “advise on the necessary covers and levels of insurance to help protect SMEs through this period of uncertainty”.
He continued: “Our underwriters are working with brokers to proactively identify which of their SME customers are at risk of underinsurance.
“Aviva’s Commercial Insurance Tool (CIT) uses data analytics to help identify where a business may be underinsured, potential gaps in cover and recommend personalised insights to help SMEs make informed decisions about their insurance cover – this will protect SMEs from the effects of fast-rising inflation, supply chain disruption and other uncertainties.”