95 FSB Martin McTague, National Chair, Federation of Small Businesses, looks at building resilience in the face of adversity and accessing affordable insurance There were 5.6 million private sector businesses in the UK at the start of 2021, of which 5.5 million have between 0 and 249 employees. Small businesses, micro businesses and the selfemployed play a crucial role in the UK economy and insurance is an integral part of business resilience. An uncertain trading environment continues to threaten small firms’ long-term sustainability, with the Coronavirus pandemic, and the costof-living crisis contributing to the financial squeeze for small businesses. In addition, the lack of availability of affordable and adequate insurance cover has been raised by small businesses as a significant barrier to their growth and innovation. Increased premiums Many small businesses are reporting an increase in premiums, including on compulsory types of insurance cover, meaning that many firms have no option but to swallow the costs. Insurance is often missed from the cost of doing business debate, but it shouldn’t be. Alongside increasing insurance premiums, small firms continue to deal with surging input price inflation, rising energy and fuel costs, the start of emergency post-COVID-19 debt repayments, tax increases, and labour shortages. Small and micro businesses act more like individual consumers in the way that they buy insurance and the knowledge they have of insurance products and law. It is therefore unsurprising that many find it difficult to interpret policies as they don’t have in-house insurance expertise. A lack of clear information and complex language in policies are detrimental to their ability to assess the value of the cover that they are getting for their business. At FSB, we play our part in helping small businesses navigate this maze through our FSB Insurance Service, which we established in recognition of these challenges and the need for bespoke guidance to find the right cover. But nonetheless, it is evident that a collaborative approach is needed between the insurance industry and small business representative bodies to improve understanding through the use of plain and intelligible language, to help small firms receive quality products that are value for money. Resilience for the future Resilience must be built through planning for the future by learning the lessons from the COVID-19 pandemic. During the pandemic there was significant uncertainty for small firms about whether business interruption insurance would pay out, and it took the decision of the Supreme Court to determine that it should. It is critical for improvements to be made to avoid this in the future. The Government must work together with FCA as the regulator and the insurance industry itself to reduce the likelihood of businesses experiencing such uncertainty again. For economic recovery to continue, small businesses need support to access affordable insurance. Any insurance requirements must be proportionate. A one-size-fits-all approach risks small businesses overpaying for insurance in circumstances where many are already struggling, or policies being inappropriate with a possible impact on future claims. The risks that small businesses face continue to change, and whether it’s terrorism, cybercrime or climate change, there is more work to be done to support small business understanding and awareness of the associated risks and effective resilience measures. We propose that governments across the UK raise awareness through key stakeholder bodies on cyber risk and signpost to relevant information, and that the insurance industry should play a role in raising awareness and helping small businesses to reach their net zero goals. IN THE FACE OF ADVERSITY ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.