30 November 2016

SMEs not concerned by Brexit, says report

Almost three-quarters of manufacturers say that Brexit is not a risk to their business, according to a report released today by commercial insurer RSA.

The report, entitled ‘Future Impacts’, assesses the effects of economic events, including Brexit, on business growth, as well as looking at the risks facing businesses and how they are managing those risks.

On top of the headline figure of 74% of manufacturers not seeing Brexit as a risk, 29% said leaving the EU will have no impact at all and just under half (45%) were confident that it will be positive for their business. However, there are a number of significant threats that many companies are not sufficiently protected against.

The top three risks that manufacturers identified were: economic uncertainty (35%); increased market competition (35%) and cash flow (31%). One-fifth of manufacturing SMEs say they would go out of business if they were hit with an unexpected bill of £50,000. However, over half (59%) of SMEs in the sector are not insured against any of their top three risks.

Additionally, 88% of insurance brokers see under-insurance as a problem for their SME clients. They suggest that companies which do not have enough insurance in place are potentially at risk of not being covered for the full cost of repairing the damage caused by unexpected issues.

The report also indicates a worrying trend whereby 82% of companies have not updated their insurance coverage as a result of technological change and new threats, such as cyber-attacks. Government figures suggest that around 65% of large businesses and 75% of SMEs have experienced a cyber attack of some form. However, the report has shown that only 9% of respondents said they have specific cyber cover in place, and only 26% say they are concerned about an attack.

“The onus is not only on SMEs themselves to better manage their risks, but also on brokers and insurance providers to proactively raise awareness of the protection gap and help SMEs to better understand the risks they face,” said Russell White, schemes and deals director at RSA.

Author
Chris Beck

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