The UK saw all domestic Covid restriction lifting on 24 February, marking the start of a new chapter in the pandemic. We had previously reported on what the economic impact of this may look like. Today, we’re focussing on businesses and if there were any take-aways after almost two years of on-off restrictions.
Legal and General’s latest State of the Nation report explores the effect of the Covid-19 pandemic on businesses.
The research, released at the end of 2021, surveyed 500 Small and Medium Sized Enterprises (SMEs) and found that there had absolutely been a shift in perception following the pandemic, with four out of 10 businesses wishing they’d prepared more for such an event in advance.
The role of SMEs within UK business
The report also revealed that just under half stated that the pandemic had made them more likely to take out business insurance to protect against the loss of a key person, while 50% said they were more likely to take out protection for their business loans.
SMEs make up around 99% of UK businesses. They’re responsible for a huge amount of turnover in the private sector and employ a large number of the UKs overall workforce.
Other statistics from the data revealed just how vital business protection is for many of these types of businesses:
- 59% of respondents said they would cease trading in less than a year should the death of a key person occur.
- 52% of those surveyed admitted that the death of an owner or key person was the biggest risk facing their business.
- 94% recognised that they had at least one key person in the business.
- 73% of businesses have taken out corporate protection after receiving advice.
What is business protection?
Business protection can be defined as insurance that protects your business from the financial effects of a director, partner or key employee suffering a critical illness or dying. It can be broadly split into three key categories:
- Key person protection aims to avoid the negative impact that a prolonged absence of a key person may have on the business, such as loss of contacts, sales and knowledge.
- Shareholder/partnership protection exists to provide continuity of the business should a shareholder or partner die, by ensuring some or all of their shares can be purchased to retain control of the company, whilst also providing a fair value to their estate.
- Business loan protection enables outstanding company loans to be paid off if the business owner of the loan were to die or fall critically ill.
All these types of cover may be important depending on the size and scale of your business, and there may be other types of protection that are relevant, too.
Do I need it?
Considering the worst when it comes to your company and employees is never a pleasant experience. Yet it is important to protect the business you’ve worked so hard to build.
With that in mind, along with the revealing statistics above, we believe that most SMEs (and indeed larger businesses and smaller partnerships, too) would certainly benefit from having the conversation with key stakeholders and putting business protection in place.