Recent ACC research supports Sovereign’s observation, indicating that 1,880 businesses over a calendar year were forced to wind up because of injury to a key person. It says this figure would be much higher if business wind ups due to death or serious illness were also taken into account.
Sovereign says it has refocused its attention on developing an insurance solution that protects a business’s income.
This is the rationale behind Sovereign launching Business Earnings Protection, a business insurance product specifically designed to protect a business’s income in the event a key person is unable to work due to illness or injury, Sovereign managing director Simon Blair says.
The other issue is that there is evidence showing that there is a serious level of under-insurance among business owners.
“It’s disturbing to see that 40.6% of chief executives, 77.6% of business partners and 84.5% of key employees don’t have any life insurance,” Blair says.
“We see the claims and know that protecting business cash flow is critical to a business’s survival. Imagine the problems a business might face should it lose the revenue and expertise of a key person. Without protection, a business could be left with no option but to wind up,” Blair says.
Business Earnings Protection provides a monthly payment to the business so that it can make loan repayments, cover overheads, hire a replacement or meet other financial or business obligations.
The new product fits within Sovereign’s Business Continuity range.
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