Help is being offered to IFAs in writing business protection to ensure new businesses are well protected
The number of businesses failing increased to more than 15% in the second quarter of this year and according to providers, this could be due to the inadequate protection of key employees.
Research from business information company Dun and Bradstreet, revealed that it is small businesses suffering the most, with a total of 20,164 business failures reported in the first six months of 2001. Yet in a recent survey conducted by Royal & SunAlliance (RSA), although 94% of companies said they had at least one irreplacable key person, only 32% were found to have some sort of keyperson cover in place.
Mark Edwards, IFA personal market leader at RSA, said this gap in cover was attributed to a lack of awareness of the products available. 'It is clear that while businesses recognise how important people are to their success, the main reason they do not take action on keyperson cover is because in most instances no-one has explained it to them. Consequently, the business protection market is left underinsured leaving obvious potential opportunities for IFAs,' he said.
Roger Edwards, product marketing manager at Scottish Provident, agreed saying that companies need to make sure that every part of the business is protected in order to combat this failing trend. 'In an environment where lots of companies are going under, businesses need to be fully aware of the problems that could occur if they were to lose their key people. It is essential that businesses cover their entire portfolio. Just as they may insure buildings, a business needs to make sure all its important assets are protected ' including key managers,' he said.
IFAs are being offered help in writing business protection policies with the launch of a new guide from Royal & SunAlliance. The guide outlines why businesses need protecting and outlines the different types of protection available, with a focus on keyperson protection, partnership protection and shareholder protection.
• IFAs interested in receiving copies of the guide should contact their RSA consultant.
