About Drewberry Insurance
stars
stars
Drewberry Insurance services are rated 4.9 / 5 based on 137 client reviews
Our Insurers - Aviva, LV, Friends Life, PruProtect, Ageas Bright Grey, Scottish Provident, Legal & General, Exeter Family Friendly
972
479
Income Protection Quote

The Business Protection Gap: Business Owners’ Attitudes Towards Protection


Legal and General have examined the business protection gap in a recent survey. They found that under insurance has risen over the last two years and the business protection shortfall in 2013 is £1.35 trillion.  The survey also investigated business owners’ attitudes to different types of business protection including key person insurance, shareholder protection and relevant life plans.  
Infographic Showing Business Owners Attitudes Towards Business Protection- Research by Legal and General 2013

Key People

When looking at key people 61% of business owners said that the death or critical illness of this person would have the greatest impact on their business. This was above their premises being damaged by fire and the loss of a major contract. 41% of business owners said that if a key person died or became critically ill the business would cease trading within eighteen months.  Despite these concerns only 43% had any life cover for a key person.

This raises the question of why businesses are not protecting their key people when they protect assets such as the premises or equipment. Key person protection, also known as keyman insurance, can provide funds to cover the financial impact of losing the key person.

For example they could be used to compensate for reduced sales and lost profit or to cover the recruitment and training of a new employee.  The main reasons given for not having key person insurance were that the business owner hadn’t thought about it, had not got around to arranging it or were too busy to evaluate it.  This highlights the role that advisers can play in explaining the benefits of business protection.

Shareholder Protection

Shareholder protection enables business owners to purchase the shares of a deceased shareholder thereby retaining control of the business.   The survey found that 60% of owners had no protection in place to cover the cost of purchasing shares should a business owner pass away. However 45% thought that the partner shareholders would buy the shares if this happened and 51% wanted their beneficiaries to receive fair compensation for their shares if they died.

Relevant life plans

The survey also asked whether business owners had heard about relevant life plans and how they provide tax efficient life cover for employees or directors. Only 37% of business owners had heard of relevant life plans and only 25% had used them.  This shows that there is a real need for advisers to raise awareness of these plans as they are a cheaper way of providing life insurance to the owners and their employees.

Why aren’t business owners insured?

The main reasons the business owners surveyed gave were that insurance cover is too expensive or that they had not considered it.  The research found that large businesses with a higher net profit had a greater concern with assessing and managing business risk than smaller businesses, yet all businesses need to be aware of the risks and consider protection.  On this note, if they were going to receive advice on protection 44% of owners would prefer to be advised by an insurance broker.

In light of these issues, Legal and General and unbiased.co.uk have launched a campaign to raise awareness of the importance of business protection and tackle the business protection gap.

Further information about Shareholder Protection, Key Person Insurance and Relevant Life Insurance is available on the Drewberry website.  Our business insurance experts are available on 0208 432 7333 to discuss your options and provide quotes from the whole of the market.


Older News Stories




Usefool Tools


Employee Benefits Infographic
Group Insurance Insurance Quote
Employee Benefits Question and Answer
Unbiased Insurance Advice
verisign seal
Insurance Providers
1. You Come First
We are a client focused business who always aim to put you first.
2. We are Experts
To provide you with the best advice, we need to know our stuff!
3. We are Human
We are real people with feelings who are here to help you.
4. We are truly Independent
We believe the best advice has to be completely unbiased.
5. We are here to Educate
We are here to educate you so you can make informed decisions.

We would love to hear from you, whether you are enquiring about our services, a career, or a business partnership.

  enquiries@drewberryltd.com
Our Locations
London Office
Corporate Advice
  020 8432 7333
Brighton Office
Personal Advice
  01273 646 484
Protection Review Awards Nomination
June 11, 2014
Protection Review are highly regarded as an authority within the protection …

Drewberry Launch New Family Insurance Tool
June 5, 2014
We are very pleased to announce the launch of our family …

The Power of Positive Thinking
May 9, 2014
At Drewberry Insurance, we talk to a lot of clients about …

Published by Andrew Jenkinson
Financial Services Authority