To quote a famous commentator (desperately trying to add a football theme during the 2016 Euros!) “They think it’s all over… It is now!”. Whilst that now immortalised one liner, used by the great Kenneth Wolstenholme 50 years ago, referred to the last major win in a football tournament for the then mighty England side, many of us on Friday morning of last week had exactly the same sentiment or “Thank God it’s all over!” may well have been more appropriate!
As we got closer and closer to the polling day, uncertainty definitely prevailed and world stock and currency markets took the opportunity to give us the jitters. Post the result, however, many commentators are starting to take proper stock of the situation and in many cases are taking a more pragmatic view of the aftermath.
Our own Lothar Mental, CIO at Tatton Investment Management, commented “In this context it needs to be remembered that in the heat of the campaign, fears were raised which are not necessarily a true reflection of what is likely to happen. So while the Brexit decision is likely to put an additional strain on the UK’s economy, much of the extent of the negative scenarios painted for this outcome during the campaign are likely to have been markedly worse than what actually lies ahead.”
Whilst George Osborne, in his first post-Brexit appearance, stated "I said we had to fix the roof so we were prepared for whatever the future held and thank goodness we did." On the process of the UK's departure from the EU, he said "Only the UK can trigger Article 50... we should only do that when there is a clear view about what new arrangements we are seeking with our European neighbours… In the meantime... there will be no change to people's rights to travel and work and to the way our goods and services are traded or to the way our economy and financial system is regulated."
In an interesting debate, organised by Vitality in London, two days before the referendum, John Longworth the Chairman of the Vote Leave Business Council put across some very interesting views on the pro-leave business community. In his “myth busters” he pointed out the whole of business and the City were not are against leaving the EU. He admitted the business community was clearly divided, but it was notable that more than 100 leading City figures had signed a letter in support of leaving the EU and that, 8 of the top economists wrote a joint report supporting the case for a better future out of the EU. We all saw high profile companies, such as JCB and Ford, on the opposite sides of the debate too… So should the uncertainty create such hysteria or are we in a pretty good place? One other question may be: Has the Brexit issue had any impact on the risks of businesses at all?
According to the Federation of Small Businesses, we can see that:
- 99% of the estimated 4.9m businesses in the UK are SME’s
- 18% of all UK SME’s are female led
- 98% have fewer than 10 employees
- Over 60% of private sector businesses are sole traders
- SME’s employ 24.3m (over 80% of the UK workforce)
- 46% of the total of SME’s are not considered to be at the mature stage (less than ten years old)
So, how much has really changed for them over the past few days?
In truth, these businesses are as much at risk now as they were before the referendum had even been considered. Whilst many businesses take the time to consider pension schemes, employment benefits and staff protection of some sort, they often forget to ensure the very thing that funds all of those – the business itself.
The following loan protection statistics clearly show where risks, but also opportunities, lie. 57% of all businesses have some form of business debt. For businesses who have borrowings of over £50,000;
23% said they had Credit Card debt
33% said they had a Directors Loan Account
33% said they had Personal Loans
36% said they had an overdraft,
56% said they had a business loan.
The logic is that business owners suffering a critical illness, or worse - death, would have a huge effect on the running or operation of those businesses. Statistics show that:
- 42% of sole traders had no form of cover
- 43% of recent start-ups (younger than 2 years) had no cover
- 58% of smaller companies valued at £250,000 and under had no cover
Whilst the above is statistic laden, it is important to highlight the issues faced by small businesses. With increasingly less banks with a high street presence, and less of the remaining banks focusing on financial advice, intermediaries must highlight these issues to the huge number of small businesses and help to deliver the solutions. This is where the Protection Providers can help.
Royal London recently found in a survey that almost 1 in 3 SME
owners told them that losing a key person for more than
6 months would have a severe impact on their business. Yet 79%
of those surveyed didn’t have any key person cover in place.1
They believe there could be a lot of untapped potential for business protection among SMEs. If you’re looking to increase the amount of business protection cases you write, their business protection planner can help you identify potential SME clients. It also includes ideas, videos and tools to help you sell business protection to these types of clients.
Visit their planner to find out more and start making the most of your business protection opportunities.
VitalityLife believe it shouldn’t just be big businesses who can offer their employees the best benefits. Their Relevant Life Policy (RLP) offers business owners and employees so much more than traditional death-in-service benefits and employee wellness programmes.
With a RLP from VitalityLife clients get comprehensive cover as well as discounts and rewards such as half price gym memberships and health screening. Research indicates that healthy employees are likely to be more productive and take less time off sick - a huge advantage for the business they work for. Employers can also save themselves nearly 50% tax at the same time as offering protection for their employees. In addition, their RLP tax savings calculator can help you and your clients compare the price difference of providing life cover through a RLP compared to an ordinary life policy. Access the calculator here.
Benefits for the business
Benefits for employees
- Tax efficient - employers can save nearly 50% tax
- A great employee benefit for small businesses, especially when death in service is not available
- More affordable cover with an upfront discount and up to £100 annual cashback per employee with Vitality Optimiser
- Fitter, healthier, more engaged employees & cover amounts can be tailored by employee
- A cash lump sum payment for terminal illness as well as death
- A range of healthy discounts and rewards
- It demonstrates to staff the value place upon them
- Tax efficient - no National Insurance on premiums or Inheritance Tax on payout
- It doesn't count as a retirement benefit so won't affect the Lifetime Pension Allowance
When AVIVA launched their online Platform AVIVA Life Protection
Solutions (ALPS) they sought to transform the Personal Protection
Market. They are now looking to do the same with Business protection.
Their Business protection support line offers:
- Updates on applications
- A special “high value” underwriting team for high sums assured
- A pre-sales underwriting facility to help assess underwriting requirements
- Taxation and trust experts to help ensure policies written under trust are done correctly
In addition to these and to support sales of these products they have :
- Increased their financial limits – asking only for a full financial questionnaire for cases of more than £2m Life and £1m CI – not requiring any further financial evidence for cases of up to £4m Life and £2m CI
- Added a bespoke pricing service for cases of more than £1m life and 500k CI
Business life Insurance Options and Relevant Life are both available on ALPS. They are making the quote and apply journey simpler and slicker and their intuitive underwriting process can save clients valuable time.
With second opinions offered by Best Doctors, payments of benefits offered in instalments for greater tax efficiency, a host of Product Guides, Trusts and even online calculators AVIVA believe they have a Business Protection proposition that is second to none.
LV focus not only on the support they give to the intermediary, but also the client. LV= Business Car is designed for the small business owner and is available as soon as a client takes out LV= Business Protection cover. It gives small business clients free access to legal and tax business advice, and gives them their own ‘virtual’ solicitor and accountant, available at the end of the phone, whenever they need them. The service offers advice in two key areas:-
Legal: Offers direct access to lawyers and solicitors specialising in business and commercial law; covering areas such as:
- Employment law and how to avoid or prepare for a tribunal
- Health & Safety law, requirements and inspections
- Commercial disputes including tenancy and invoice payment issues
Tax: Offers direct access to business tax and VAT experts made up of accountants and ex HMRC employees, covering areas such as:
- Tax and VAT relief
- Completing a self-assessment return
- Current and changes to tax rules
- Dividends paid from limited companies
- Receiving a tax investigation notice
In essence, we can see that there are a host of opportunities for intermediaries that are already engaged in the business sector AND a huge amount of support from Providers for established brokers, as well as those moving in to the area of business advice.
Whatever your stance on Brexit, there is clearly a lot of opportunities available to intermediaries and Paradigm believe we should 'Keep Calm & Carry On' with business as usual.
As ever whatever we can do at Paradigm Protect to support you, please let us know. You can visit www.paradigmprotect.co.uk where you can also find Provider specific information. Alternatively you can call Mike Allison on 07775 690340, email firstname.lastname@example.org or call the office on 0121 781 7337.
Using a slight parody from the great AA Milne to highlight the ongoing resilience of intermediaries….