Underinsurance Iceberg Ahead
Andy Jenkins, Operations Director at Russell Scanlan, has been taking a closer look at the ongoing issue of business underinsurance. A real problem across the insurance industry that can become frighteningly more evident during the winter months, especially when extreme weather incidents seems to become the norm rather than the rare occurrence.
A survey recently caught my attention revealing that nearly half of the UK’s Small and Medium sized Enterprises (SMEs) do not have enough storm cover. That may seem a little incidental to some but it is an indicator of a bigger and wider problem, the tip of the underinsurance iceberg.
Interestingly, the Federation of Small Businesses has researched that 66% of SMEs were affected by flooding, drought or snow in the past three years and that three out of five SMEs do not have a plan to deal with extreme weather events*, as seen in the media over the past two years.
Taking a closer look at the data, we discovered that in the East Midlands, nearly two-thirds of businesses are unaware if they’re covered for damages from floods or high winds.**
Those figures are not a huge surprise to me but are still shocking nonetheless. Few small businesses knowingly underinsure and there are reasons for their oversight, lack of time, knowledge and understanding where best to turn for the right advice from the right advisor. It can all contribute but it can also lead to catastrophic outcomes for small businesses. More and more SMEs are coming unstuck with underinsurance and they need all the help they can get, such as reassurance that affordable storm and flood cover is out there.
I think we have to do much more as an industry, to communicate the perils of underinsurance; particularly as all the statistics are warning us that businesses are going unheeded and I fear that despite the surveys and the statistics, we are not getting the bigger picture.
Perhaps we need to lobby more associations and groups to really hammer the message home and engage with a wider audience. In the meantime, we’ll keep banging the underinsurance drum to all that will listen and take notice.