RSA Research: 93% of brokers believe underinsurance poses major threat to UK businesses
Authored by RSA
Brokers sound alarm as new research signals economic turmoil is leading to widespread underinsurance for UK businesses
- More than half of brokers see clients change policies as a result of energy crisis
- 3 in 5 (60%) brokers cite economic uncertainty as their client’s most common concern
- RSA’s new Broker Pulse reveals more than 9 in 10 (93%) brokers believe underinsurance poses a major threat to UK businesses during ongoing economic turmoil
Rising energy prices and economic turmoil are leading to a dramatic shift in the insurance needs of UK companies, according to new research launched by RSA Insurance today. RSA’s inaugural Broker Pulse, a representative survey of more than 200 brokers from across the UK, shines a light on the risk of underinsurance for businesses in an era of inflationary pressures and increasing costs across the board.
The research shows that 60% of UK brokers are hearing their clients citing economic uncertainty as a common concern, with almost half (47%) seeing changes or cancellations made to insurance cover as a result. The energy crisis challenge is a particular concern for these businesses, as over half (57%) of brokers are seeing policies altered as a response to rising energy costs. Brokers also highlighted high wage demands (40.78%) as key issues for the businesses they cover.
Lee Mooney, Managing Director Commercial Lines at RSA commented: “The increase in businesses changing their policies reflects the anxiety that UK organisations are feeling. With many not sure if they will be able to survive rising costs, they are taking any means necessary to make ends meet. In some cases, this means cancellation of, or failure to take out, necessary insurance policies - leading to insufficient cover for their businesses.
“This is a high- risk strategy - underinsurance might be a short-term fix to a cost crunch, but could lead serious consequences when dealing with unexpected business disruption. It’s an area where insurers and brokers need to continue collaborating, providing solutions, education and awareness to help customers facing a future that is increasingly uncertain.”
In attempts to cut costs, personal accident insurance is the most likely form of cover to be jettisoned by businesses. Nearly a third (30%) of brokers see this as the most reduced or altered. Legal protection insurance, product liability insurance and self-employed and sole trader insurance all following close behind at 25%. With many businesses seeing new energy quotes up to 10 times their current rates.
There is a prevailing sense among respondents that underinsurance represents a major threat to business continuity in the UK - with 93% of brokers saying that it currently poses a major risk to UK businesses. Despite this, 71% of brokers do believe that the insurance industry is doing enough to make sure that businesses are getting the best policy for the best price.
Whilst the results of the Pulse reflect a feeling of overarching uncertainty in the UK business landscape, a silver lining could be found as just one in five (21%) of those polled noted public health is a challenge pre-occupying their clients suggesting the fading impact of the pandemic.
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