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Non-Insurance in the Small to Medium Sized Enterprise Sector

Posted by admin - 17/12/08 at 04:12:39 pm

The Insurance Council undertook analysis into non-insurance in the household sector. This research is deliberately targeted in the small to medium sized (SMEs) business sector.

The Insurance Council survey of SMEs was conducted by Woolcott Research in early September 2008. The Insurance Council made use of Woolcott’s monthly omnibus survey which covers 1,000 registered Australian small businesses defined as those with less than 20 full-time employees.

Sole traders accounted for around 25.0% of the sample population while businesses with 1-4 employees, 5-10 employees and 11-19 employees accounted for 42.0%, 22.1% and 10.4% of the sample population respectively. The distribution of participating SMEs on an industry basis is shown in the graph below.

The key findings of the report were:

· 26% of all small to medium sized enterprises (SMEs) do not have any form of general insuranc

· Sole traders have the highest rate of non-insurance with 40.0% operating their business with no general insurance.

· Of the SMEs that purchase general insurance, 94.0% indicated they considered that they were adequately insured. Taken together with the rate of non-insurance, this means that under two thirds of all SMEs have adequate insurance.

· Over 80% of SMEs who indicated that they were inadequately insured cited the cost of insurance as a barrier to purchasing. Reform of taxation on general insurance products would therefore reduce the cost burden to SMEs and contribute to a reduction in the incidence of non-insurance amongst SMEs.

· For the majority of small businesses, profit expectations do not appear to impact on planned insurance coverage, at least in the short term. 50.0% of respondents indicated they would leave their insurance coverage unchanged despite the expected change in profits over the coming year.

Source: Insurance Council of Australia, 17/12/08