Covering the SMEs

According to Government statistics the largest area of growth in the small and medium enterprise (SME) sector is property and business services, which grew in terms of business numbers by around 45% in the past eight years alone.

There are now around 3.5 million small businesses in the UK, over 1.6 million of which are large enough to be registered for VAT, and likely to be operating from their own premises. In 2003 almost 85% of small businesses had turnovers of less than £500,000.

The market for small commercial property insurance, especially office cover, is therefore significant. Although many SMEs (particularly the very small ones) will buy their office package insurance from their bank, Datamonitor estimates that around 75% of this market is still insured through brokers.

Most of the policies on offer appear to be off-the-shelf policies, offering a standard set of covers with fixed sum insured limits for many elements of cover. Apart from the obvious variables like contents and buildings sums insured, some insurers allow customers to choose their own limits for items such as business interruption or liability.

Fortis, for example, allows its customers to choose a wide range of limits to tailor the cover to their needs - much more like a traditional small combined offering rather than a "package" offering.

Public liability limits are typically £2m, with some insurers allowing the selection of higher limits. Policy-wide excesses are now typically around £250.

For those businesses which depend on computing as a core part of their activity, many policies offer an optional computer equipment section. Typically this provides cover against damage to the hardware and loss of stored information, on a breakdown or all risks basis.

Overall, providers like Royal & SunAlliance and NIG appearing to be clear leaders in terms of overall levels of cover.

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