Insurance brokers do not perceive Brexit as a threat but see SMEs underinsured

Insurance brokers are largely unconcerned about the impact of Brexit on their businesses, according to a report by RSA.

Around 64 percent of brokers said that Brexit would either be positive (32 percent) or have no impact on their company (32 percent), the report named ‘Future Impacts’ shows.

The data is being released as a part of RSA’s Future Impacts report which paints an in-depth picture of the perceived effect of Brexit, the risks businesses are facing today, along with emerging risks, and how they are protecting themselves against them.

The report also reveals that 80 percent of brokers say their SME (small and medium-sized enterprises) clients would not be financially prepared if faced with an unexpected cost of £50,000 due to a major loss not covered by their current insurance policy. When SMEs themselves were asked about how this would affect them, more than a quarter (28 percent) said they would go out of business.

The research also shows that 88 percent of brokers see underinsurance as a problem for their SME clients.

Despite the prevalence of underinsurance, only 28 percent of brokers expect their SME clients to take out more insurance in the coming 12 months. When SMEs were asked about their insurance, only 14% said they plan to take more out over the same period.

According to brokers, the top three reasons SMEs aren’t taking out enough cover are the price of insurance policies, the belief that they don’t require the cover and lack of awareness.

“Brokers have a key role to play in this by encouraging business owners to review their risk management strategies and ensure that their insurance policies are up-to-date,” said Russell White, schemes and deals director, regions and SME, commercial risk solutions at RSA. “UK SMEs are a significant part of the UK economy, employing 15.6 million people in the UK and generating a combined annual turnover of £1.8 trillion, so it’s crucial that they have something to fall back on should they be affected."