How the pandemic has impacted small business owners
Small businesses in the UK have faced unprecedented and unanticipated risks as a result of COVID-19, with the pandemic acting as a stress test to their financial resilience. Some of the hardest hit businesses are those that are customer facing, including the hospitality, travel and retail sectors.
The most impacted small businesses in our survey (see methodology) claim to have lost a staggering 30% or more of their annual revenue as a result of the pandemic and are more likely to be younger entrepreneurs with business revenues of less than US$275,000 per year. These businesses are first and foremost concerned with survival, expressed as both being able to stay open (66%), as well as coping with the loss of revenue they have experienced (68%).
In addition, now that the UK Supreme Court has ruled that business interruption losses resulting from the COVID-19 pandemic are recoverable under a variety of insurance policies, financial loss will be reduced for some small business owners. In our survey, 44% of small business owners have had to partially shut down their operations, which will have an impact on insurance volumes.
Small business owners’ interest in insurance solutions
When asked about their immediate post-pandemic priorities, responses were similar to the insurance consumers surveyed, with the majority saying they are likely to plan against any future crisis through opening a savings plan and paying off debts. However, the intention to consider insurance coverage is less widespread: just 21% said they plan to speak with a financial adviser, 18% claimed they would purchase new insurance products to indemnify them against future risks and 15% claimed they would increase the cover on existing policies.
As a result of their experiences, small business owners are showing interest for policies that compensate for loss of business income. Half of respondents (51%) said they are interested in an insurance product that pays three months of expenses if their business is forced to close due to the pandemic, while 44% said they are very interested in an insurance product that covers them against liability incurred from employees or customers catching a pandemic disease in their place of business.