New research from Hiscox reveals a concerning protection gap affecting hundreds of thousands of UK small businesses.
An estimated 754,000 small enterprises may be missing core insurance cover, with more than half (55%) lacking essential policies such as professional indemnity, public liability, property or employers’ liability insurance.
The findings prove particularly alarming regarding cyber insurance knowledge. Nearly two-thirds (63%) of UK small business owners cannot correctly identify what cyber insurance covers, leaving many potentially exposed to significant financial risks from phishing attacks, ransomware attempts and data breaches.
The Insurance Awareness Problem
The Global Protection Gap Report, conducted by Hiscox across 6,250 small business owners in six countries including 1,000 UK respondents, highlights additional concerns about professional indemnity insurance. Nearly three-quarters (74%) of surveyed UK businesses could not confidently identify what professional indemnity insurance covers – protection crucial for businesses if clients allege errors or omissions in their work.
Nick Thornhill,
Direct and Partnerships Director at Hiscox UK, emphasises the importance of addressing these gaps: “Running a small business means juggling lots of priorities, and insurance can easily slip down the priority list. But if something goes wrong, the right cover can make a real difference.”
The Cost of Being Underinsured
An uninsured or underinsured cyber incident could expose small businesses to substantial unexpected costs, from legal claims to property damage and the financial and operational impact of a security breach. For small enterprises already operating on tight margins, such unforeseen expenses can jeopardise day-to-day operations, growth plans and new opportunities.
The research identifies concerning patterns regarding policy updates. One in seven (13%) UK businesses with property insurance report last updating their cover three or more years ago, whilst one in ten (10%) businesses with professional indemnity insurance say the same. These figures rise among larger small businesses – those employing five to 50 people – with 19% reporting outdated property insurance and 14% reporting outdated professional indemnity coverage.
Key Triggers for Insurance Review
Thornhill recommends checking and updating business insurance cover if revenue, headcount or operations grow by 20%. Hiscox has identified six business changes warranting an insurance review:
- Revenue or scale of operations have grown.
- Workforce or working arrangements have changed.
- Services or clients have changed.
- AI and technology play a bigger role.
- New laws or industry rules have come into effect.
- Premises, stock or equipment have changed
Thornhill notes: “As a business grows and changes, a policy arranged a few years ago may not reflect how it operates today. Taking on new staff, offering new services or relying more on technology can all be good moments to take another look and make any updates.”
Moving Forward
The Global Protection Gap Report recommends reviewing business insurance annually, or sooner if significant operational changes occur. For small business owners juggling numerous priorities, this periodic review could prove invaluable in preventing costly protection gaps.
HiscoxImage: Ideogram
Source: Cyber Security Intelligence