More than half of companies (55%) would fail if they lost one or more key people to illness, incapacity or death, yet just one in five companies have protection, according to Scottish Widows.
The insurer's latest ‘Scottish Widows Business Protection Report' also said over three quarters (77%) of respondents report that there is at least one employee in their organisation whose loss through death, critical illness or long term incapacity would seriously impact the profitability or survival of the business.
Businesses in the UK are operating in an uncertain economic environment and owners and directors are focusing on day-to-day challenges.
While early 70% of companies identified ‘delivering on commitments and promises to customers' as the most important aspect of their business, insuring against the death of a key person was picked out by just 3% as their biggest priority.
The results were almost identical when it came to insuring against a key person suffering a critical illness or long-term incapacity.
Katya MacLean, Protection Specialist at Scottish Widows said: "While business protection insurance for staff is rarely a priority, its absence can be the biggest single risk to the profitability and even the very existence of a business.
"Businesses need to strike a balance with their priorities. They can survive without a photocopier, for example, for a short period but the majority would be in far greater difficulty in both the short- and long-term if they were to lose one or more of their key employees.
"Companies need to look carefully at succession planning and all the risks posed to a business regardless of how likely they are to happen to ensure they can continue to meet what they consider their key business priorities, whatever the eventuality."
Fastway quote and apply
For both personal and business protection
‘Faster, more intuitive online service’
'Too many fall into bankruptcy because they have not protected key people’