This is the first time in four years that any organisation has published an update to Swiss Re’s widely cited research from 2005. The Business Protection gap now includes:
- Corporate debt gap of just under £300 billion
- Shareholder protection gap of over £400 billion
- Key person protection gap of over £400 billion
In order to calculate these figures, Legal & General conducted research amongst members of the British Chamber of Commerce. The study showed that 44% of business owners say that their business would fold within 12 months of the death or critical illness of a key person. However, only 4% of business owners questioned said they have shareholder protection in place and one in two (48%) do not have any formal agreement to establish what would happen in the event of the death of a business owner.
50% of the businesses surveyed have corporate debt yet just 46% of these businesses have life or critical illness policies in place to cover that money owed.
Clare Harrop, Legal & General’s head of specialist protection said: “This is a big day for the business protection market. We now have up-to-date figures showing just how few businesses are prepared to handle an event such as the death or critical illness of a key person or business owner. It is the responsibility of the protection industry to get in front of corporate clients and make business owners aware of the importance and benefits of key person, shareholder and business loan protection. The market opportunity is there and the support from providers is there, so let’s get on and close that gap.”
Legal & General recently launched a Business Protection DVD for advisers to use with their clients, to highlight the need for business protection and to help advisers write more policies in this area. The DVD, entitled ‘Let’s Talk Business Protection’, uses real case studies to explain why business protection insurance is so important. It also features research showing the potential impact of not being covered to highlight risks to business owners. It is available to order from Legal & General or can be downloaded, in full or in part, from the adviser microsite: www.legalandgeneralcomms.co.uk/businessprotection