Report shows brokers could do more to target small businesses

A recent survey has found that small UK businesses prefer to buy insurance policies directly from underwriters or aggregators over brokers.

Finaccord, a market research firm that produces a biannual report on insurance in the UK small business market, stated: "Small businesses and self-employed individuals are showing an increasing tendency to buy their insurance directly from an underwriter and their use of the internet as a distribution interface has risen sharply since the last survey undertaken in 2006."

Finaccord did not cite how many of the 1,325 businesses polled bought directly from underwriters, although it commented that underwriters had simply been "making more noise" than brokers in the small business insurance market.

Aggregators have also made headway in this sector, with 24% of respondents reporting they had already researched or bought through an online aggregator. A total of 35% said they would like to do so in the future.

A spokesman from Finaccord said it believed enterprises with only one or two employees often tried to self-determine the necessary coverage, and that it was sometimes easier for them to buy through a direct channel.

However, the research firm highlighted the fact that the market for insurance services being promoted to small businesses was substantial, given that there were around 4.66 million enterprises with fewer than 100 employees in the UK.

Finaccord added: "Around 99.7% of registered businesses can be classified as small businesses."

According to the survey, 39% of UK small businesses were uninsured and 19% - excluding self-employed individuals - were not covered, although they are legally required to have employers' liability (EL) insurance.

Ranked worst were businesses in the media, marketing and entertainment industry, with only 29.5% insured, though it should be noted that they comprised nearly 10% of respondents.

Businesses in the hospitality and food and beverage industries, which comprised 4.4% of the total, ranked best, with 86% insured. Child and pet care businesses, making up 4.1% of the study, followed closely at 81.5%. Home businesses averaged about 50%.

While the survey did not ask why companies had chosen not to purchase business insurance, it assumed that a good portion doing without cover believed their businesses to be so straightforward that there was no need for coverage.

However, 29% of respondents said they would ideally be covered for public and product liability. Further, more than 20% of businesses polled also stated they wished to hold personal accident, EL, professional indemnity and legal expenses insurance.