More than one in four (26%) small businesses in the UK would have to immediately close if a key person died or became critically ill, according to the latest iteration of Legal & General’s leading research on the business protection market.
13 Aug 2019
Legal & General’s survey, which was first launched in 2009, prompts concerns about the wider economic impact that could be caused by businesses not having a Key Person insurance policy. According to a recent Government paper, SMEs account for more than 99% of Britain’s 5.7m private sector businesses and they employ over 16 million people. Legal & General’s research suggests that up to nearly three million of these companies could be at risk of closing within a year of losing a key person. It also means that around 4.3 million employees have little or no protection against losing their jobs if their employer suffered from a critical event.
Nearly two-thirds (63%) of the businesses Legal & General surveyed said they had more than one key person and SMEs were aware of the impact their loss could have on the firm’s operations. Across the more than 700 small companies surveyed, losing a key person was ranked as the number one concern. Of those SMEs which had already suffered from such an event, nearly a third (30%) said that a business owner or important employee dying or becoming critically ill had impacted their profits. Almost one in five (19%) said it had lost them the confidence of their customers.
Richard Kateley, Head of Intermediary Development at Legal & General: "Small and medium businesses are essential to Britain’s economy; they employ millions of people across the UK and make up more than 99% of the private sector. Yet our research shows that many of these companies could be a risk of closing their doors if a key person in their business died or became critically ill – more than a quarter would even have to cease trading immediately."