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Daily Insurance Industry News
Thursday 18th of January 2018
November 28, 2011

SME’s prefer cash reserves to insurance

by Gill Montia

Story link: SME’s prefer cash reserves to insurance

SME’s prefer cash reserves to insurance

Research by AXA UK suggests that the UK’s small and medium-sized enterprises (SMEs) have a lower level of business insurance than similar firms across continental Europe.

According to the study, only 39% of Britain’s SMEs currently have business interruption cover in place, while 47% of respondents hadn’t even drawn up a business continuity plan.

At the same time, the UK’s smaller firms are less reliant on bank debt than in the rest of Europe, and would therefore appear to be reacting to perceived risk by stock piling cash.

Thirty six per cent of UK SMEs questioned were holding three months or more of cash, compared to 30% across the remainder of the EU.

According to AXA, the industry needs to convince firms that insurance can provide the peace of mind they are looking for and free up rainy day cash for investment.

The group’s commercial lines chief executive officer, Amanda Blanc, comments: “It is clear that whilst they are worried about rising costs, regulation and tax burdens business continuity planning among SMEs in the UK is not as advanced as it is in many other countries.”

She adds: “UK SMEs appear to have put in place prudent financial provision and practices, when compared to their European counterparts, but it is perhaps worrying that they appear to be ‘self insuring’ rather than taking on the cost of appropriate insurance provision against key business risks.”

 

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