New research by commercial insurance company RSA indicates that the majority of SMEs aren’t too worried about the effect of Brexit on their businesses, placing it well down on their list of concerns.
Brexit Not A Threat
Results of the research, published in the RSA’s report entitled Future Impacts, revealed that 70% of UK SMEs surveyed believed Brexit will either have no impact (43%) or will be positive for 
business (27%).
However, the research also identified other more significant threats against which many SMEs have no protection. 73% of SMEs identified new risks that were not present when they launched their business, yet 82% have not altered their insurance to cover threats posed by technological change, such as cyber security risks – despite government figures that show that three-quarters of SMEs have experienced some form of cyber-attack. RSA’s research found that only 9% of businesses had cyber cover in place, and only 26% said they were concerned about cyber threats.
Russell White, Schemes and Deals Director, Regions and SME, Commercial at RSA, warns there are many risks that SMEs are “seemingly oblivious to, particularly when it comes to emerging risks such as cyber-attacks.”
Top Three Business Risks
Perhaps not surprisingly, then, cyber security threats were not among the top three risks identified by the businesses surveyed, which were:
- Economic uncertainty (35%)
- Increasing market competition (35%)
- Cash flow problems (31%)
Yet despite identifying these threats to their business, 58% were not insured against any of these top three risks and 28% admitted that if these threats landed them with a bill of £50,000, they would go out of business.
Russell White says: “Although the vast majority of SMEs are untroubled by Brexit, there are a range of risks that appear to have fallen under their radar. Our research shows a significant disparity between the issues perceived by UK businesses to be a risk and the extent to which they are protecting themselves against them.”
Unaware and Under-Covered
Indeed, the extent of insurance cover, as well as how comprehensive it is, does seem to be a problem. The report also mentioned that 88% of insurance brokers are concerned that SME clients are underinsured, meaning that if the unexpected happens, their cover may not be sufficient to pay their costs – something which Russell White warns places them in a “precarious position.”
“Although not all risks are directly insurable, there are policies that businesses can take out that would alleviate the impact these risks could have, such as, for example, business continuity insurance which could cover loss of income in the event of a significant incident affecting their property,” he says.
“Businesses’ lack of awareness of emerging risks and the fact that only 14% of SMEs plan to increase their cover in the next 12 months suggests the scale of underinsurance amongst UK businesses is likely to worsen in the coming years unless significant action is taken.”
However, this state of affairs isn’t all the fault of SMEs themselves, he says; the industry must take responsibility too, and he called on brokers and insurance providers “to proactively raise awareness of the protection gap and help SMEs to better understand the risks they face, and what they can do to protect themselves against them.”
He added: “RSA has devised a number of recommendations demonstrating what insurers, brokers, government and SMEs themselves can do to subvert this trend and help strengthen UK businesses and their contribution to our economy.”