The research, which surveyed over 500 UK businesses, found four in five (81%) were dependent on a key employee whose loss would seriously impact the profitability and/or survival of the business. Despite this 67% of businesses fail to have this key employee insured, leaving them exposed to a significant loss in profit as a result of their departure through illness or death.
This lack of protection is surprising as the research shows three in five UK businesses without key person insurance (59%) fear they would not survive the loss in profit if a "key person" such as an employee, partner or director were lost, while 11% have not even considered how it would affect them. When it comes to employers' priorities, they rank insuring office equipment such as photocopiers and printers higher in critical requirement to the company (29%) than ensuring critical illness cover for key persons (13%.)
For those businesses that have not taken out any insurance (such as life cover or critical illness cover) to cover the cost of losing a key person, director or partner, a third (32%) don't see the value of it, 29% have not thought about it, 19% think it would be too expensive, and 5% didn't even know if they needed it.
Richard Jones, protection market director at Scottish Widows explained: "Staff can be the greatest assets in a business but these findings paint a worrying picture. It is concerning that such a high percentage of UK entrepreneurs do not have financial contingency plans for their business in the event of losing key staff. The current climate emphasises how crucial it is for businesses to review their finances and in doing so improve their control over the future and security of their organisation."
