Allianz issues warning as SMEs look to save amid inflation concerns

Inflation continues to be the biggest threat facing small and medium-sized enterprises (SMEs) in 2024, according to new research by Allianz Commercial.

Figures showed that more than half (51%) of SMEs felt under threat from the state of the UK economy, an increase of 18% compared to 12 months ago.

Some 61% said inflation and the cost of living were their biggest concerns, while 31% felt cash flow could be an issue.

Despite these concerns, only 19% of small business owners increased their sums insured in the past year, while just 12% increased their insurance indemnity periods.

The survey also found that 42% of SMEs that own their premises do not know the rebuild value of their buildings.

The Allianz survey was carried out by One Poll in February 2024 among 500 SME decision makers.

Alex Ktenidis, director of digital trading at Allianz Commercial, said it was key that businesses had the right level of cover amid only a small amount increasing their sums insured.

“SMEs are clearly facing extremely challenging times, so it’s understandable that business owners are looking to save where possible,” he said.

“Having the right level of insurance protection is crucial and brokers play a pivotal role in assisting small business owners to fully understand which insurance cover and indemnity levels are needed.”

Adapting

Despite some businesses not increasing their sums insured, the survey found that within the past year, 21% had increased the number of products or services they offer.

Another 14% said they had moved from working at a business premises to working from home and 14% had increased the number of employees.

Looking ahead, more than half (51%) of respondents said that they saw potential for their business using artificial intelligence (AI) in the future.

Ktenidis said: “We know that SMEs are incredibly agile and many of them adapt their business models to suit the ever-changing environments that they operate in.

”Working with brokers, we want to provide the best support possible to those customers, so when they make significant changes, we can help make sure this doesn’t lead to gaps in their cover.”