Social enterprises struggle to find insurance amid growth spurt

Social enterprises are on a growth spurt, but according to the School of Social Enterprises (SSE), they struggle to get insurance because of their niche nature.

SSE chief executive Alastair Wilson said insurers should consider social enterprises on an individual basis because a “one-size-fits-all approach does not work”.

“[Social enterprises] often operate in niche markets as they are innovating solutions for social change. They undertake work which is not commonplace within commercial organisations and may operate in markets that are broken,” he said.

According to SSE, insurers are increasingly likely to be approached by social enterprises as entrepreneurs starting out in business increasingly want to do it in a social way.

Social enterprises are businesses that trade to tackle social problems, improve communities, people’s life chances, or the environment.

An SSE spokeswoman said: “The model is always evolving depending on the wider financial, environmental and policy climate. So from an insurance point of view it can be hard to keep pace with it.”

Growth spurt

According to a survey by Social Enterprise UK, close to one-third of the 70,000 social enterprises in the UK are three years old or younger.

Over the past year, some 38% of social enterprises saw an increase in turnover compared with 29% of SMEs, while 63% expected their turnover to increase in the next two to three years compared with 37% of SMEs.

The popularity of the sector has led senior RSA executives and underwriters to work with the SSE to mentor budding entrepreneurs.

RSA is also running risk management workshops to teach social entrepreneurs about how to manage the risks in their companies.

SSE said the benefits offered by the RSA fellowship included access to a large breadth of international resource of expertise and experience to helps its students with their projects.

An SSE spokeswoman added: “For RSA – as a provider of a product – social enterprises might become their customers. Their customers are the general public will also be more interested in social enterprises, so in working together, it is good for RSA to show they can demonstrate that understanding and communicate that with their general customers.”

RSA SME director Tara Kneafsey said the interaction would help the insurer to gain a competitive edge in understanding emerging risks and disruptive business models that are growing. The insurer chose to work with SSE because it wanted to help people in an area where it could “use its expertise”.

Kneafsey said: “Social entrepreneurs and enterprises are disrupting the market because they are trying to solve a problem that does not have a typical conventional solution. Getting access to disruptive thinking in business models helps RSA to stay ahead of the curve.”

RSA Group and UK head of corporate social responsibility Peter Collins added: “Today we might not write that business or take that business on, but it is about what we need to do in the future to be able to gain access to that growing sector.”