Research reveals spike in businesses cancelling insurance cover
New research reveals that in the past 12 months, there has been a spike in businesses cancelling insurance because they can no longer afford it, resulting in greater numbers of underinsured and a sharp rise in insurance ‘blackspots’.
Over the next 12 months, the findings reveal many more businesses are considering cancelling insurance because of cost and the two main reasons for this are rising premiums and a fall in income.
The research commissioned by Premium Credit, the UK’s leading premium finance company, reveals 33% of businesses have cancelled one or more insurance policies over the past three years because they could no longer afford them, and in 50% of these cases, cancellations occurred in the past 12 months. The findings are being released today at the British Insurance Brokers’ Association (BIBA) conference in Manchester.
However, some of the policies cancelled are compulsory for businesses to have. Indeed, 16% of executives/managers say their employers cancelled their employers’ liability cover over the past three years. Many more businesses are considering cancelling one or more types of insurance cover over the next 12 months.
Adam Morghem, strategy and marketing director at Premium Credit said: “It is shocking to see so many UK businesses missing out on vital, sometimes legally necessary cover due to cost or concerns over payments. This is leaving millions exposed to unnecessary risks and potentially even greater costs further down the line.
“There are ways to avoid these so-called insurance blackspots. Premium finance enables businesses to spread the cost of cover instead of paying for it all in one go and was specifically developed to help businesses and consumers pay for insurance more efficiently and effectively – particularly the necessary, often vital protection they need every day.”
Businesses cancelling insurance
Premium Credit’s survey with managers/executives at businesses reveals 16% believe their employers have cancelled employer liability cover since 2016. Some 14% claim they have cancelled Director & Officers cover, and the same percentage have done the same with their product liability insurance.
Type of cover
Percentage of managers/executives who believe their employer has cancelled this type of insurance over the past three years because they could no longer afford it
Employer liability cover
16%
Directors & Officers cover
14%
Product liability
14%
Buildings insurance
13%
Vehicle insurance
12%
Business interruption
11%
In terms of the insurance policies businesses are considering cancelling over the next 12 months, the most common are D&O cover, and Employers Liability Insurance.
Type of cover
Percentage of managers/executives who believe their employer will cancel this type of insurance over the next 12 months because they can no longer afford it
Directors & Officers cover
10%
Employer liability cover
9%
Vehicle insurance
8%
Business interruption
8%
Buildings insurance
7%
Product liability
6%
Risings premiums and a fall in income makes insurance too expensive
In terms of why businesses have stopped paying for insurance because they could no longer afford it, 41% said it was because they saw a drop in their income, and 38% said it was because of increases in premiums.
