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160,000 SMEs without mandatory employers’ liability insurance risk fines and prosecution 

160,000 SMEs without mandatory employers’ liability insurance risk fines and prosecution 

Over 160,0001 small businesses in the UK with between one and nine employees, will not have employer’s liability insurance by the end of the year, according to new research2 from Smart Money People.

The UK’s dedicated financial services review site warns that employers’ liability insurance is a legal requirement for all businesses that employ staff. It enables businesses to meet legal costs and compensation should an employee’s injury or illness be as a result of their work. Without it, small businesses risk fines from the Health & Safety Executive (HSE) of up to £2,500 for each day they are uninsured, and potential prosecution in the event of an incident.

Although there are some exemptions (such as employing family members), Smart Money People’s CEO, Jacqueline Dewey said: “In most cases, employers’ liability insurance is a must. We realise that some small businesses, particularly those at the smaller end of the scale, might understandably be trying to save money at present. However, this is one of those cases where insurance is non-negotiable.”

Small business insurances set to grow in 2023

Smart Money People also analysed which small business insurances are set to have the highest growth rates in 2023.

Directors’ and officers’ liability insurance policy is likely to see the biggest net increase at 17%, followed by stock insurance (16%), and then key person insurance and legal protection insurance (15%).3

The biggest growth area for directors’ and officers’ liability insurance is amongst small businesses with 10-49 employees. This reflects these growing and ambitious businesses’ cognisance of protecting their directors, partners and officers as their enterprise grows.

Although all SME business insurances are set to grow this year4, the research found that those who are stopping their policy or reducing their cover have significant concerns:

65% are worried about being unable to access the additional support embedded within insurance policies
52% are concerned about the financial aspect of being uninsured and not being able to claim, or having to find the funds themselves
27% feel they may be unable to pitch for or undertake certain types of work, potentially risking the future growth of their business

Jacqueline Dewey concluded: “Whether they buy on price or policy, we want to help businesses make more informed decisions about which insurer to choose. Therefore we are asking all small businesses to leave reviews of the insurers they have recently dealt with in order to help other businesses in the same situation.

“This collective wisdom helps others make better decisions, while also giving insurers the chance to shape their products and services to meet the needs of their small businesses customers.”

To leave a review of business insurance, please visit the site.

Businesses will be asked if they were given sufficient information to understand products and services, whether they felt they received good value for money, and whether the insurer’s customer service is up to scratch.


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Notes to editors

Notes to editors – 8% of micro businesses with between 1 and 9 staff say they do not have employer’s liability insurance and will not be taking it out later in 2023. A further 6% of these businesses said that they have employer’s liability insurance but will be stopping this insurance later in the year. Government statistics show there are currently 1,187,045 SMEs in the UK with 1-9 employees so 14% (8%+6%) of 1,187,045 = 166k SMEs without the correct employer’s liability insurance in place by the end of 2023. Research undertaken by Opinium on behalf of Smart Money People from 3 to 13th February 2023 amongst 502 decision-makers at small and medium enterprises. To reach these results, small businesses were asked which insurances were relevant to their business and whether they would be taking out a new policy increasing the cover on an existing policy keeping cover levels the same reducing cover on an existing policy stopping their policy altogether or not currently having a policy and not planning to take one out Type of insurance included in the research were: Employer’s liability insurance Contents insurance Buildings insurance Directors’ and officers’ liability insurance Key person insurance Public liability insurance Professional indemnity Business interruption insurance Legal protection insurance Stock insurance Cyber liability insurance About Smart Money People Smart Money People is the UK’s dedicated financial services review website and insight business. Launched in 2014, Smart Money People uses its review data to help consumers research financial providers, and works with financial firms to improve their customer experience.

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