The headwinds facing the UK economy risk leaving small businesses underinsured, Aviva has warned.
Inflation, supply chain disruption, and labour shortages could leave UK small and medium enterprises (SMEs) at risk of facing huge bills, if the insurance policies they have fail to cover the actual costs repairing buildings or replacing assets, the insurance giant said.
Aviva’s exec Jason Chambers said: “SMEs have faced a tumultuous couple of years, and have come through challenges posed by Covid, only to face some of the most challenging economic headwinds of the last few decades,” as he warned a lack of coverage “could really impact a bunsiness’s ability to stay afloat.”
The insurer’s research shows 28 per cent of UK small businesses have not reviewed their insurance policies in the last year, during which period inflation has caused costs to surge. It warned that its estimates show around half of UK businesses are to some extent underinsured.
The survey showed almost one-third (32 per cent) of SMEs do not take either inflation or supply chain issues into account when deciding the value of their insurance coverage.
“Our research shows that many SMEs are in the dark about how inflation, supply chain disruption and other macroeconomic and global issues can impact their own business in the event they have to make a claim,” Chambers said.
Aviva warned that many businesses could struggle to pay any costs their insurance policies fail to cover, as the insurer’s poll of 500 SMEs showed 10 per cent could not survive if hit with a £10,000 bill as a result of being underinsured.