SMEs are facing ‘significant business risks' by partnering with suppliers not covered against the loss of a key employee, Zurich has warned.
The latest findings from its SME Risk Index, which polled 549 senior decision makers from SMEs, showed that one quarter (25%) of SMEs said that they would face operational difficulties if only one employee was absent.
Over two-fifths (42%) said they face significant difficulties if between 2 to 5 staff were absent.
Yet still the large majority of SMEs (75%) neglect to consider whether a new supplier has protection insurance against the death or critical illness of a key employee, Zurich said.
Chris Atkinson, retail protection proposition manager, at Zurich UK Life, said:
"Too many SMEs are taking a big risk by working with a supplier that is not protected against the loss of its key personnel. This is especially worrying if an organisation tends to rely on one supplier only. If one of the supplier's employees were to fall critically ill or suddenly pass away, the company could experience significant supply chain problems, resulting in major disruption to operations.
"Organisations need to understand how the loss of a key member of staff could severely affect their business. It is crucial that they take concrete steps to be able to cope with such unforeseen events, for example by adopting Key Person insurance themselves and by asking their suppliers to do the same."
The survey also asked SMEs whether they have a business continuity plan in place to protect against the loss of key employee.
Nearly three in five (58%) said that they do not, while only just under one third of them (29%) said they have a plan.
Of these, just around one in ten (11%) confirmed that they have Key Person insurance.
