Bosses prefer to insure photocopiers than staff
28 September 2011
British bosses are more likely to protect their office equipment than their key staff, according to new research.
The result highlights a series of findings revealing that businesses are leaving themselves vulnerable to the death or incapacity of a key person.
Scottish Widows' Business Protection report found that over three quarters (77%) of companies had a key employee whose loss would seriously impact the profitability or future survival of the business.
But only 13% have protection in place to mitigate this risk.
Perhaps more shockingly, despite such a low take up of Business Protection, 60% of firms admitted they would definitely not survive the loss of a key person.
Another worrying finding was that in the last 12 months more than a quarter (27%) of business owners have invested their own money into their business, while a further 13% expect that they will have to do so in the coming year.
The report called on owners who are putting personal assets at risk to take the necessary steps to prevent a damaging impact not just on their business but potentially their personal lives and families.
In fact, it is more likely that bosses will insure office equipment, such as the photocopier against breakdown than they are to insure a key individual whose skill sets are vital to the future survival of the business.
Just over a quarter (27%) of businesses have insurance for office equipment in place compared to only 6% with financial protection if a key person dies and 4% with protection if a key person suffers a critical illness.
The key reasons for not taking out cover were not seeing the value (38%) and expecting it to be too expensive (17%), followed by not previously thinking about it (16%).
Despite the majority of businesses openly acknowledging the loss of a key person would have a severe impact on their future survival, only 29% have actually sought any form of advice on business protection.
This included IFAs, their bank or other resource such as their solicitor, accountant or even family and friends.
Iain McGowan, head of savings and protection at Scottish Widows, warned that businesses could be further at risk if they did not prepare properly.
"There are many reasons for business owners failing to take action," he said.
"In some cases, this represents a failure to plan properly or a lack of understanding of the benefits of business protection.
"Perhaps even a refusal to contemplate the death or critical illness of a colleague.
"However the potential consequences to the business demonstrate the importance of protecting arguably the one thing that can ensure its future survival; its employees," he added.