2005
(21/02/05) Research highlights problem of 'Under-Insurance' amongst SMEs
New research from AXA Insurance¹ reveals that the majority of commercial insurance brokers believe that their SME clients are under-insured. Around half believe that their SME clients do not have enough insurance for their working premises and 55% claim that they need more cover for their motor fleets. Some 56% of commercial brokers interviewed felt that their clients were under-insured with regards to protecting themselves against any loss of income that might occur as a result of a disaster striking such as a fire or theft of stock on a large scale.
One fifth of brokers felt that SMEs needed to increase cover for their premises by between 11% and 20% and one in four said that they needed to increase their insurance for loss of income by the same level.
Colin Calder, head of broker development at AXA Insurance said: "Unfortunately very few small to medium sized businesses review their risk management programmes and in some cases, they don’t even have any. This means they may not be aware of the many risks that they face or the chances of these happening. This can result in a huge problem of under-insurance which helps explain why so many businesses never recover from disasters."
With regards to under-insurance on a sector basis, AXA's research revealed 41% of brokers feel retailers faced the biggest problem. This was followed by 32% who chose manufacturing and 27% who said wholesale.
In terms of why so many SMEs are underinsured, brokers identified the following factors:
| Reason why so many SMEs are under-insured | Percentage of brokers who said that this was a major reason for being under-insured |
|---|---|
| Reluctance to pay premium for correct level of insurance | 85% |
| Lack of understanding about real cost of assets | 81% |
| Lack of understanding of insurance | 77% |
| Poor risk management practices | 57% |
| Poor advice from advisers | 52% |
AXA provides a range of insurance and risk management services to employers and it has recently developed a free guide to help them reduce the level of risk they are exposed to. The Business 4 Tomorrow guide can be requested on CD or by downloading from AXA’s small business website http://www.axa4business.co.uk.
- Ends -
Notes to Editors
¹100 commercial insurance brokers were interviewed between 13th December and 20th December 2004
More information
If you are a journalist and require further information contact one of our media team
About AXA
AXA is a worldwide leader in financial protection and wealth management, with major operations in Western Europe, North America and the Asia/Pacific area. AXA employs 117,000 staff and tied agents and, as of 30 June 2004, had €827 billion in assets under management. AXA reported total revenues for first half 2004 of €37 billion and underlying earnings of €1,436 million.
AXA ordinary shares are listed on the Paris Stock Exchange; AXA American Depositary Shares (ADSs) are listed on the NYSE under the ticker symbol AXA.
AXA Insurance One Aldgate, London EC3N 1RE. Internet: www.axa.co.uk
AXA Insurance is the trading name of both:
AXA Insurance UK plc, Registered Office: 107 Cheapside, London EC2V 6DU. Registered in England No.78950
AXA General Insurance Ltd, Registered Office: 107 Cheapside, London EC2V 6DU. Registered in England No.141885
Members of the AXA Group of Companies
AXA Insurance UK plc is authorised and regulated by the Financial Services Authority