11 February 2020

1.6 million SMEs experience absence of a key person yet the majority do not protect themselves

5 min read

Meera Khanna, Consumer PR Manager
Meera Khanna

Corporate PR Manager - Protection


Research from mutual insurer Royal London reveals that nearly three in ten (27%) SMEs surveyed by YouGov, equating to an estimated 1.6 million businesses in Great Britain, have experienced the absence of a key person/employee.

  • An estimated 1.6 million small-and-medium British enterprises (SMEs) have experienced absence of a key person yet four in five have no protection against it in place
  • 2.4 million SMEs think that absence of a key person/ employee would severely impact their businesses
  • Perceived lack of relevance is the biggest barrier to buying business protection among SMEs who don’t have it

Despite this, more than 4.6 million SMEs (79% surveyed) do not have key person insurance protection in place.

The research also revealed that one in seven (16%) of all SMEs surveyed don’t have any sort of protection in place for their business at all.

Importance of protection

Calculations suggest that a further 2.4 million SMEs (41%) agreed absence of a key person or permanent employee absence (i.e. due to death or serious illness) would have a severe impact on their business. Yet only 2 in 10 of those who agreed it would have a severe impact on their business have key person insurance in place (19%).

Nearly half (44%) of SMEs who had heard of this type of insurance perceived protection against the absence of a key person to be important to their business.

The research also found that 3 million SMEs (52% surveyed) have not had a discussion about business protection with their accountant, financial or legal adviser, or anyone inside or out of their business. 

Barriers to business protection

Barriers to business protection amongst those who do not have it included the perceived lack of relevance to a business due to being a sole trader (23%), not having a business loan (35%) or generally feeling it is not relevant to their sector (23%). Barriers also included perceived cost or value for money (33%) and that businesses feel it’s unlikely their employees would become seriously ill or if they do they would be able t0 replace staff (20%).

Ian Smart, product architect at Royal London said:

“The research highlights the glaring protection gap when it comes to SMEs. Despite many businesses recognising that a key person absence would have a severe impact, it is concerning that they have not yet talked about protecting their business with a financial adviser or taken out any form of protection.”


Notes to editors

  1. Royal London commissioned YouGov to survey 748 SMEs between 28 October – 1 November 2019. The survey was carried out online. Figures are weighted and are representative of British business size.
  2. The Business population estimates for the UK and the regions 2019 reports there are 5.9 million SMEs in the UK. Percentages from the YouGov survey have been equated into real term figures. Royal London has calculated these figures by removing Northern Ireland’s business population to equate to British figures, and extrapolating the number of SMEs from a percentage of the 5,776,000 SMEs in the British business population. All calculations of real term figures are estimations.

For further information please contact:

Meera Khanna, Corporate PR Manager - Protection

About Royal London:

Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £139 billion, 8.6 million policies in force and 4,348 employees. Figures quoted are as at 30 June 2020.