I am proud to be the Managing Director of an independent SME business, but like many of my peers I am finding my news feed a little concerning and my thoughts are turning to how I can begin to balance the books against rising prices.
Having successfully carried out our MBI in the Covid period, I can’t help feeling like a bit of a Boris. Everything is happening all at once.
If it is not enough that there is a war in Ukraine, the UK Government is in turmoil, and protestors are causing disruption to services on many fronts.
All of these economic issues are impacting the supply chain and the general success of any business.
Import-export costs and widespread disruption are hurting many SME businesses across the UK.
Examples include:
- Property – Material costs and labour costs increase with high inflation
- Liability – Health care has limited resources, so employees need longer to heal to return to work
- Technology – Constant cyber threats causing delays and downtime
Whilst I am confident the backbone of the British economy will always fight back – because that backbone are SME businesses like ours, I can’t help feeling that whilst don’t need to be in this climate – it is time to tighten our belts!
Can a review of insurance save money?
At Blythin & Brown we act for over a thousand UK small businesses who are now facing higher costs; raw materials, increased corporation tax, and wage demands to name but a few.
These ever-changing dynamics mean that it is getting even more complex for companies to determine and keep up to date with their insurance cover requirements. Many businesses are seeing an increase in turnover just because prices have gone up – not because the business has expanded.
Inevitably, insurance will be one of the items SMEs review when considering where there might be potential cost savings.
If you are considering changes to insurance in areas of your business to save money or thinking about taking on more of the risk yourself, our advice is to please speak to an insurance professional first.
You must seek the right advice before removing or reducing any cover. Underinsurance has always been a significant factor when this course of action is taken and could drastically impact your business’s survival if a loss occurred.
Challenging climates and under insurance
As we face an increasingly challenging climate, more cases of underinsurance will come to light at the point of a claim – and this will happen with all types of exposures – from property to cyber.
The general statistics from various sources show that in 2020, the companies that undertook valuations to identify the cost of rebuilding a property from scratch were underinsured by more than 40% on average.
The general statistics for plant and machinery show that more than 70% of businesses were underinsured by at least 10%. The average underinsurance was generally at over 40%.
The Condition of Average, which insurers use to prevent under insurance, says that if you declare an insured value X% of the actual value, then you have only paid X% of the premium due and will only receive X% of your claim.
EXAMPLE: The total value of your machinery is £1m. The sum insured is £500k. You have insured 50% of the entire value. In this example, you will receive approx 50% of any claim, so if you had an item stolen, you would only receive 50% of its actual value.
How can we help?
We offer all new clients a FREE no-obligation meeting in order to estimate your current risks – you never know, you may find that you are over insured!
No two businesses are the same, and consequently, the total costs that need to be insured will differ.
However, your insurance programme should be regularly reviewed, particularly in light of recent changes to ensure that your cover is for the correct sum insured, including inflation and the increased costs of the equipment, products, and materials you use from your infrastructure to your end product.
WHAT NEXT?
Email us YOUR insurance schedule.
We will provide an initial review within 24hrs of receiving your schedule and provide feedback on the levels of cover, price, and service offering and help you understand your exact insurance needs.