With the UK in the deepest recession since records began in the 1950′s, it is hardly surprising that the Commercial Insurance Sector has seen it’s customer base shrinking faster than the Royal Mail says it is losing hand written letters, and one would have thought that the beleaguered business insurance sector would have little to look forward too in the new year….
However, things are not always what they seem and as Kris Oldland reports, there appears to be green shoots of recovery for the spring……..
SME Commercial Insurance Sector sees promise in 2010
After a year which has been tricky for some and catastrophic for others we could be forgiven for looking towards 2010 with some trepidation and in some of the more morose corners of industry dare we say it, a heavy dose of doom and gloom? Well those hardy soles in the ever exciting SME market are having none of it – despite the sector being hit harder by the recession than most.
At least that is what the results of a recent report from British communication giant BT would seem to suggest.
The 2009 BT Pulse report has revealed that an overwhelming three quarters of SME’s predict the economy will see an upturn in 2010. Further to this over 60% of the respondents were confident about their businesses prospects for the coming year and an impressively confident 35% even predicted their situation will have improved as soon as January 2010.
The report surveyed 7,200 Directors of small and medium sized enterprises and a strategy director at BT commented that the findings “show that the economy is at a tipping point. Despite the obvious knock to confidence, positivity about when the upturn will come is encouraging.”
With 45% of the respondents going as far as saying that they have streamlined their business so that they are now operating even better as a result of the downturn, it seems that many of these SME operators are primed to thrive as soon as the market catches them up.
These bold predictions have also been echoed by the Institute for Chartered Accountants in England and Wales (ICAEW), who have also recently released a similar statement that “confidence among business professionals has turned positive for the first time in two years.”
However not all quarters of the UK industry are predicting quite such a swift return to the good times as the British Chambers of Commerce (BCC) has issued a slightly more ominous statement that although the recovery may have started, the economy still faces considerable risk.
According to the organisation, GDP will drop by 4.3 per cent this year, followed by growth of 1.1 per cent in 2010 – an improvement on the BCC’s June prediction of 0.6 per cent.
David Kern, chief economist at the BCC, says: ‘While we expect a gradual improvement over the next two years, the pace of UK expansion is likely to be weak by pre-recession standards. It is critical that wealth-creating businesses have adequate capacity to respond to an upturn in demand when the recovery strengthens.’
However despite the general confidence, many SME’s are still walking a dangerous tightrope leaving themselves unnecessarily open to adverse risk as they cut their policies and leave themselves underinsured.
Of course should these buoyant entrepreneurial companies live up to the high expectations they are piling upon themselves then it follows that their insurance needs will grow too and with the aid of a good broker they may just be able to manage the balancing act of ensuring that their cover is adequate and competitively priced.
With the SME sector looking once again to rise like a phoenix from the ashes the role of the high street commercial insurance brokers could once again become a crucial link between the sector and the general insurance industry.
About the Author:
Kris Oldland is an Insurance Journalist with particular interest in Commercial Insurance and UK business Insurance