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British SMEs thriving and growing

Press release: 14/01/2015

  1. British SMEs had a strong 2014 with three quarters (75%) improving or maintaining their turnover compared to 2013
  2. 180,000 people started running their own business in 2014
  3. A fifth (21%) of SMEs took on more staff in the past year and 4% employed people for the first time
  4. One in twenty (4%) SMEs[1] has no insurance cover in place, equivalent to over 200,000 companies across the UK

British SMEs are thriving with business owners reporting that profits are up in the past year and the outlook is positive. SMEs interviewed in the research included sole traders and companies employing up to 250 people.

New research by LV= Broker reveals that three quarters (75%) of SMEs improved or maintained their turnover in the past year. Four in ten (41%) British SMEs have seen their turnover increase in the past 12 months, while a further 34% say turnover remained steady at 2013 levels. In addition, a new generation of SME owners has entered the market as 180,000 people started running their own business in the past twelve months[2].

Employers' Liability

As well as increasing turnover, SME owners have also created more jobs. A fifth (21%) of SME owners say they have taken on more staff in the past year and 4% have employed people for the first time - equating to at well over 200,000 new jobs[3].

By law, all businesses employing staff must have employers' liability (EL) insurance as a minimum otherwise they can be fined up to £2,500 a day by the Health and Safety Executive (HSE)[4]. Despite this, the research found that 80,000 SMEs who employ staff have no cover in place, leaving them vulnerable to prosecution and fines[5].

Pubic Liability

As well as being vulnerable to fines from the HSE, business owners with premises open to the public or clients could find themselves heavily out of pocket should someone make a liability claim against them. Almost two thirds (62%) of consumers say they would make a claim against a small business if they slipped over or were injured while on its premises.

Slips and trips can result in expensive compensation claims running to tens of thousands of pounds. Analysis of LV= data shows that the number of liability claims being made against businesses has been steadily increasing in recent years and SME owners need to be prepared for them.

The Insurance Gap

While the economic outlook is very positive for British SMEs, running a business is not without risk. An unforeseen event, such as a fire or flood, can stop trading for days or even weeks while repairs are undertaken and stock replaced. Depending of the type of business, this can spell financial ruin for companies that are unable to continue trading at alternative premises.

Despite this, one in six (15%) SMEs have no financial back-up plan in place if they were unable to trade for any reason and one in twenty (4%) SMEs have no insurance, equivalent to over 200,000 companies across the UK. When asked why, four in ten (38%) of these don't see the need for any contingency plan, 21% can't afford one and one in ten (10%) say they plough all their profits back into the business.

The insurance needs of a business will vary according to the type of business and the market it operates in, as well as its turnover, stock levels and whether it employs staff. Those running their own business should seek independent advice from a commercial insurance broker to insure they get the right cover for their business needs.

SMEs are the lifeblood of the British economy and it is great to see that so many have increased their turnover in the past year and taken on more staff. The research shows that thousands are leaving themselves vulnerable to prosecutions and fines by the HSE for not having appropriate insurance in place. Getting the right advice on cover from a specialist insurance broker is invaluable for business owners and can make the difference between being able continue trading or not should the worst happen.

Mike Crane, Commercial Lines Director at LV= Broker

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Notes:

  1. According to the 2014 BIS data there are 5,236,000 SMEs in the UK. SMEs are defined as sole traders and businesses employing up to 250 people. The research found that 4% of SME owners has no insurance in place, which equates to 209,000 SMEs.
  2. According to the 2014 BIS data there are 5,236,000 SMEs in the UK. SMEs are defined as sole traders and businesses employing up to 250 people. The research found that 3.4% of SME owners started running a business in the past twelve months.3.4% x 5,236,000 = 178,024.
  3. According to the 2014 BIS data, there are 5,236,000 SMEs in the UK. SMEs are defined as sole traders and businesses employing up to 250 people. 4% of SME owners has taken on staff for the first time in the past year, which equates to 209,440 jobs.
  4. Source: HSE http://www.hse.gov.uk/pubns/hse39.pdf. The Employers' Liability (Compulsory Insurance) Act 1969 states that an employer can be fined up to £2,500 for any day which they are without suitable insurance. If they do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, they can be fined up to £1,000. All employers must have employers' liability insurance except the following: most public organisations including government departments and agencies, local authorities, police authorities and nationalised industries; health service bodies including National Health Service trusts, health authorities, primary care trusts and Scottish health boards; some other organisations which are financed through public funds, such as passenger transport executives and magistrates' courts committees.
  5. According to the 2014 BIS data, there are 5,236,000 SMEs in the UK. SMEs are defined as sole traders and businesses employing up to 250 people. The research found that 76% of SMEs has two or more employees, which is equivalent to 3,979,360 businesses. The research found that 2% of SMEs with two or more employees has no insurance in place. 2% x 3,979,360 = 79,587 businesses.

For further information please contact:

Vanessa Chance, vanessa.chance@lv.com, 0208 256 6996 / 07947 380074


LV= Broker

LV= Broker is part of the LV= group of companies, and incorporates Highway Insurance and ABC Insurance. LV= is a trademark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs 6,000 people and serves over 5.5 million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.