Rising energy prices and economic turmoil are leading to a dramatic shift in the insurance needs of UK companies, according to new research by RSA Insurance.
RSA’s inaugural Broker Pulse, a representative survey of more than 200 brokers from across the UK, warns of the risk of underinsurance for businesses in an era of inflationary pressures and increasing costs across the board.
The research shows that 60% of UK brokers are hearing their clients citing economic uncertainty as a common concern, with almost half seeing changes or cancellations made to insurance cover as a result.
The energy crisis challenge is a particular concern for these businesses, as over half of brokers are seeing policies altered as a response to rising energy costs. Brokers also highlighted high wage demands as key issues for the businesses they cover.
“The increase in businesses changing their policies reflects the anxiety that UK organisations are feeling,” said Lee Mooney, Managing Director Commercial Lines at RSA.
“With many not sure if they will be able to survive rising costs, they are taking any means necessary to make ends meet. In some cases, this means cancellation of, or failure to take out, necessary insurance policies – leading to insufficient cover for their businesses,” he continued.
“This is a high- risk strategy – underinsurance might be a short-term fix to a cost crunch, but could lead serious consequences when dealing with unexpected business disruption. It’s an area where insurers and brokers need to continue collaborating, providing solutions, education and awareness to help customers facing a future that is increasingly uncertain.”
RSA found that, in attempts to cut costs, personal accident insurance is the most likely form of cover to be jettisoned by businesses, with nearly a third of brokers highlighting this as the most reduced or altered.
Legal protection insurance, product liability insurance and self-employed and sole trader insurance all following close behind at 25%, with many businesses seeing new energy quotes up to 10 times their current rates.
Against this backdrop, 93% of brokers surveyed by RSA said that underinsurance currently poses a major risk to UK businesses.
