A Very Risky Business

New research reveals that only a third of SMEs currently have Professional Indemnity Insurance (PI). Not all SMEs will require PI cover but of the remaining 3.3 million of the UK’s 5.2 million SMEs, those that do could find themselves uninsured should their clients suffer a financial loss as a result of their negligent or poor advice.

The number of UK Small and Medium Sized Enterprises (SMEs) with Professional Indemnity Insurance grew by 235,000 between 2013 and 2014 but two thirds have no cover at all. The research also suggested that sole traders make up majority of new policies over the past year.

Despite the number of SMEs taking out PI growing by 235,000 or 14% last year, without sole traders, there was a significant fall in the number of micro (-15%) and small (- 6%) businesses taking out PII policies.

The research from Direct Line revealed that SMEs in the legal services industry were most likely to have PI with 88% of businesses taking out insurance. This is followed by financial services (59%) and scientific, technical and engineering research (52%). SMEs in transportation (12%) and retail and wholesale (11%) are the least likely to have PI protection.