"This can lead to more comprehensive protection, without unnecessary expenses."
- Julian Hucks, Founder & Managing Director at Starpeak
Economic pressures and concerns have prompted many businesses to reduce expenses over the last twelve months; Aviva found over 20% of businesses in the UK reduced or considered reducing insurance-related expenses in 2023. This has left 50% of businesses underinsured to some degree – cutting back on protection has left them exposed to substantial risk.
The recent General Election has heightened uncertainty, leaving many businesses (especially small & micro-sized enterprises) struggling to choose an appropriate insurance provider. It may seem like a tiresome task, but businesses mustn’t allow concerns about cost or lack of knowledge to leave them exposed.
Instead of cutting back on insurance, employers need to better understand the types of products and providers on the market. By doing this, businesses can remain protected in a way that is cost-effective and aligns with their specific needs.
“Buying the cheapest products may appear to be a quick fix to combat financial worries, but this will likely turn out to be more costly in the event of a claim.”
Selecting an appropriate insurance provider is paramount for financial stability. Insurance serves as a protective barrier, shielding organisations from unforeseen circumstances that might otherwise result in closure.
Businesses should seek capacity providers that offer expert risk management and regulatory compliance. They should ensure that the provider delivers a streamlined, hassle-free claims process; efficient cybersecurity and data management are also becoming increasingly important with the rise of new technologies – particularly for smaller businesses. Notably, Verizon Business ‘Data Breach Investigations’ 2024 Report, found that 46% of all cyber breaches impact businesses with fewer than 1k employees.
“To avoid late payments during tricky times, businesses should prioritise providers that offer manageable payment plans.”
Digital transformation has generated a demand for Alternative Payment Methods (APMs). As a result, more insurers are starting to offer solutions that allow customers to pay in instalments, or by premium finance. According to the latest research commissioned by Premium Credit, roughly 15% of small & medium-sized enterprises (SMEs) have recently switched to monthly payments for insurance, to better manage cash flow.
There are several types of insurance that businesses should consider, starting with Employers’ Liability (EL) Insurance which is a legal requirement for any business with employees. Those without this can face fines, legal action, and reputational damage. Employers should also consider Professional Indemnity Insurance, Public Liability Insurance, and Cyber Insurance for those storing third-party data.
“Small businesses may be surprised by the number of low-cost products available for their specific market.”
Moreover, it’s important for businesses to consider how political & macroeconomic events can impact the type of insurance needed. The General Election might bring changes to areas such as employment laws and taxes. As such, organisations may opt to partner with a provider that offers educational resources, regulatory compliance support, and economic forecasting to aid business planning.
When researching online, there are a few ways businesses can assess potential providers for their insurance needs. Firstly, businesses can compare quotes from different providers by requesting multiple insurance quotes. This is a no-obligation opportunity to check out different insurers’ costs and their policy offerings, allowing comparison without financial commitment or pressure to purchase.
“Finally, businesses should seek recommendations from industry networks; this can provide reliable, sector-specific insights about the risks and insurance needs particular to their field.”
Alternatively, employers may prefer to use an insurance broker to act as the middleman between them and the provider. Insurance brokers are skilled professionals who can suggest suitable policies within a business’ budget and offer advice – this is essential when handling complex insurance requirements.
With more knowledge, businesses can make informed decisions and understand the various product types available. This can lead to more comprehensive protection, without unnecessary expenses.
