02 January 2018

Three in four British SMEs fail to insure their most valuable asset

3 min read

Lorna Wiltshire
Lorna Wiltshire

Lorna Wiltshire, Corporate PR Manager


  • Only a quarter of SMEs insure their key people
  • 3 out of 10 SMEs have lost a key employee for three months or more due to a serious illness

New research from Royal London, the UK’s largest mutual life insurer, reveals that only a quarter (26%) of small and medium enterprises (SMEs) have insurance covering key people in their business. Worryingly over half (51%) of senior decision makers in British SMEs who have heard of this type of insurance, don’t think it is important to have a policy. This could be driven by lack of awareness, despite 3 out of 10 (30%) of all SMEs having experienced the loss of a key employee for three months or more due to a serious illness. Of those SMEs aware of each type of cover nearly two-thirds believe it is important to insure their business premises (65%), and 62% their stock and equipment. Yet only 26% actually have a policy to protect a key person. Key person provides a lump sum payment if a key employee suffers a critical illness or dies.

Smaller businesses would face the biggest impact if they lost a key employee, but 57% of businesses with less than 50 employees, who are aware of key person insurance, don’t think it is important. Larger SMEs - with 50 to 249 employees - are more likely to have experienced the loss of a key employee to serious illness or death and nearly half (47%) have taken out a policy.

Over half (51%) of SMEs said that no-one had discussed business protection insurance or recommended that they take out a policy. This shows that there is a need for senior decision makers in British SMEs to speak to a financial adviser to find out whether their business could benefit from the peace of mind that business protection insurance can offer.

Ian Smart, Product Architect at Royal London said: 

"People are the most valuable asset of any business, but SMEs are more likely to insure their premises and stock than their key people. With a record 5.7 million SMEs in the UK a lot of businesses are leaving their futures exposed to loss of a key employee through serious injury, illness or death.

Senior decision makers at SMEs need to find out more about business protection insurance from their financial adviser to help insure the future of their businesses."

- ENDS -

For further information please contact:

Lorna Wiltshire, Corporate PR Manager

Notes to editor

Paragraph one: percentages are based on responses from senior decision makers in British SMEs who have heard of these types of business insurance, unless we use the term all SMEs.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 732 company owners/ proprietors, Partner, Chairperson/ Chief executive, Managing Director, Non-Executive Director or Other board level manager/ director of businesses with 1-249 employees. Fieldwork was undertaken from 21st - 30th August 2017. The survey was carried out online. The figures have been weighted and are representative of British business size.

Key Person Cover:

If a key person dies or is diagnosed with a critical illness the business will receive a lump sum payment. In a small business this is usually the owner, the founders or key employees. The cover is important because the death or serious illness of a key person in a small business could cause the company to close. The lump sum can be used in a number of ways such as to recruit a temporary or permanent replacement or to train another employee to step into the role.

Royal London Business Protection Menu Plan provides protection against the loss of a key employee, as well as a partner, member of shareholder director. It offers the flexibility to mix and match a range of covers to suit the needs of SMEs with the option of different terms and cover amounts as well as a number of trust solutions. Each plan comes with access to Royal London’s Helping Hand service that gives clients access to a recruitment specialist at no extra cost. They can help source a list of temporary replacements within 48 hours. A legal helpline is also available to which gives advice on all aspects of Employment law.

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.