The opportunity for insurers to sell commercial cover to the UK’s micro business population is growing, new research has shown.
The latest UK SME insurance survey from finance sector research firm Verdict Financial found that nearly 30 per cent of the country’s micro business owners have yet to take out commercial insurance.
With micro businesses now accounting for over 95 per cent of British companies, according to the survey, the opportunity for insurers to offer cover to these UK ventures is fast-growing.
The results of the survey suggested that owners of smaller businesses have lower budgets, and are therefore less likely to buy insurance cover. Micro owners may also perceive their ventures as less risky, and won’t therefore seek coverage.
Commenting on the research, Verdict analyst Daniel Cripps said that insurers were missing a trick. “There is greater opportunity to sell commercial insurance, especially within the micro segment of businesses.
“It could be argued that smaller businesses are most in need of insurance as they have the fewest resources and least capacity to recover from financial losses,” he added.
The study concluded that to reach a greater number of micro businesses, insurance companies needed to innovate to offer more small business products, while improving product penetration.
Reducing the level of underinsurance for small UK firms was also found to be critical. The survey showed too many small business owners would be set to lose out financially in the event of a claim.
Cripps went on to say that education was required about the benefits of commercial insurance. “Brokers and insurers should aim to educate [micro businesses] about the range of commercial products available, and why they are a worthwhile purchase,” he said.
Small businesses call for greater flood insurance backing this winter
Sign up to our newsletter to get the latest from Business Advice.