Small business owners are wary of insurers who stress the value of coverage for their workers and company, Department for Business, Energy & Industrial Strategy (BEIS) small business commissioner Liz Barclay has said.
Speaking at the Financial Inclusion Commission virtual summit Barclay said: “I do know that there is a big, big trust issue as far as insurance is concerned and it’s partly because of this whole thing that you feel as if you’re paying constantly for premiums but you’re never going to get any of that money back.
“So I do think the argument that a trusted third party comes along and says: ‘What about protection? You need to build your resilience, here’s how you might do it’ – is something that needs to be considered.”
Barclay added: “One in five small businesses do not recover from a catastrophe, partly because the insurers takes so long to get the money to that small business that their customers have moved on. The goodwill has gone and the customers have found another source of their supplies. So very few ever come back from that kind of catastrophe.”
Barclay also commented on the income protection need that self-employed people in particular have.
Barclay said: “There is little resilience for the 90 per cent of the self-employed people that don’t have income protection. We lost around 750,000 to 800,000 freelancers during the pandemic because of income shocks and of course, it’s not all about ill health, it’s about losing income, clients and customers.
“Of those self-employed people who left the sector, a lot of them reported as little as 10 per cent of the income they previously had before the pandemic started.”