There are 4.3m SMEs and the number is growing, but where do they go for support? Defaqto gives some pointers.
According to the Small Business Service (SBS), there were an estimated 4.3m business enterprises in the UK at the start of 2005, an increase of 59,000 (1.4%) year on year, and almost all of the enterprises (99.3%) were small business (0 to 49 employees). Therefore the market for SME business is still significant.
Although Datamonitor's report into the small to medium-sized enterprise (SME) market (Targeting SME's in UK General Insurance 2006) notes that 40% of '
SMEs would consider buying their commercial insurance via the internet, professional advice is still sought after through intermediaries.
Defaqto has looked at the cover provided within small combined, retailers, offices and hotel policies for buildings insurance, and found that there is actually a wide variation between the products.
Buildings
Cover for buildings is usually provided as an optional extension, however, within the small combined policies there are more insurers who will provide this cover as standard - presumably since most businesses in this area are responsible for insuring their own property.
Most insurers will offer all risks or accidental damage cover as standard, although there are a number of insurers who provide specified perils as standard with the option to increase cover. Perhaps surprisingly, and topically given the recent dry summers, subsidence cover for buildings is usually provided as an optional extra, with some insurers not providing any cover.
Removal of debris and underground services is either covered within the overall buildings or contents sum insured. Generally, nearly all insurers will apply index-linking to the buildings sum insured.
Cover
An area of cover where there are notable differences is trace and access cover under small combined policies, which can range from £2,500 up to £25,000 or be covered within the overall buildings sum insured. Another notable difference is in the hotel table where, surprisingly, cover for swimming pools under the buildings section is only provided by six of the 13 insurers listed.
The standard and underground services excesses range between £250 and £300, with an average excess of £1,000 applying to subsidence claims.
Helpline services for emergency repairs or glass claims are provided by nearly all insurers.
In choosing a property insurance policy for commercial clients there are a few other issues which may need to be taken into consideration. Some insurers allow capital additions to the insured property, typically up to 10% of the insured value, without the need to issue a new policy, although the insured may have to pay an increased premium immediately.
So if a customer is contemplating any expansion or improvement works, these policies should be borne in mind.
Index-linking of sums insured is useful, although possibly less so given the relatively low inflation climate we now experience. Even so, sums insured should be reviewed every couple of years at the very least, to ensure they are still adequate.
Although the online trend is still increasing within personal lines and looks set to break into the SME area, there are still a significant number of SMEs who require advice from the intermediary market.
It may be necessary for intermediaries to change their approach to how advice is provided, but the opportunities still exist. The need for at least a website, detailing the services and advice on offer, should be the minimum that is provided for SMEs.
