UK Business Protection Gap Reaches £1.1TN

The UK's business protection gap has now reach the dizzy height of £1.1tn, reveals Legal & General following their recent research into this heavily over-exposed sector.

According to L&G, this gap includes a corporate debt exposure of just under £300bn, a shareholder protection shortfall of over £400bn and a key person protection gap of over £400bn.

As part of this survey Legal & General quizzed members of the British Chamber of Commerce. The survey results show that 44 per cent of business owners believe that their business would fold within 12 months of the death or critical illness of a key person. However, disturbingly only 4 per cent of business owners questioned had shareholder protection in place and 48 per cent had no formal agreement to establish what would happen in the event of the death of a business owner.

Of the businesses surveyed around half have corporate debt, but just 46 per cent of these businesses have any cover in place to enable the debt to be paid off if the business suffered the absence of a key person through death or critical illness.

The Insurance Helper's head of specialist protection Michael Cooke commented: “This data from L&G, whilst useful in clarifying the precise numbers involved; and L&G should be commended for clarifying them, again underlines the size and risks of the huge protection gap that we have been tirelessly closing with our business clients for a number of years now.

"It's disconcerting just how few businesses are prepared to survive potentially disastrous events such as the death or critical illness of a key person or business owner, which will always trigger fear uncertainty and doubt among the staff, suppliers and creditors of the business and it is usually the actions resulting from this that will cause a business to fail.

“It is the responsibility of the owners, partners or directors in businesses to protect the business from failure by ensuring that it's staff, it's suppliers and it's creditors remain confident that the business will survive such challenges through putting in place the appropriate insurances to provide adequate funding to meet the challenges that such events are likely to present.”

Business owners or directors wishing to discuss their exposure and how business protection can most cost effectively be utilised to protect their businesses can contact Michael Cooke on 0845 003 0065 or via www.theinsurancehelper.co.uk