Keep your insurance costs down

Small businesses can lower their insurance costs by weighing the value of some of their business activities against the costs of insuring them, says SME group the Federation of Small Business (FSB).

Tim Lazenby of the FSB’s insurance brokers Warren Hill warns that it will be “very difficult this year” for SMEs and his advice is to look very carefully at which business activities are entirely necessary.

If, for example, 10% of business activities are in an area in which insurance premiums are particularly high, it may be worth suspending those activities in the short term, until the situation improves.

Another way of lowering premiums, he suggests, is to take up best practice in health and safety policies. A good health and safety audit can help to lower insurance costs.

This advice comes on the back of warnings from small business groups that rising insurance premiums could drive a “substantial” number of SMEs out of business this autumn.

Members of the FSB are reporting costs of commercial insurance cover rising by an average of 200% while some small firms have premiums that have risen over 500%. On top of this, employers’ liability insurance – a legal requirement in the UK – is becoming increasingly difficult to find.

These increases have led the FSB to ask the government for help in averting a “growing crisis in the small business insurance market”. Lazenby points out that the government is receiving more in insurance premium tax because of the higher premiums.

He would like to see some of this being pooled to help small businesses pay their premiums. He says they have had “a positive response” from the government on this matter.

To keep up to date with this issue visit the FSB website at

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