Times are tough for many owners of small businesses. Higher energy and raw material costs are eating into profits while sales are being hit by the cost of living crisis. Costs up, sales and profits down. A recipe for impending business disaster. Sadly, insensitive insurers are not making life any easier.
According to the Federation of Small Businesses, three in five small firms are seeing the cost of compulsory cover such as employers’ liability insurance rise at renewal. In many instances, the increases are 10 per cent and more. No explanation for the price hikes are provided.
‘Amid a cost of doing business crisis, higher costs for essential insurance are the last thing small businesses need,’ the FSB’s Tina McKenzie told me last week.
It’s how Dave Small feels. He runs HO Soccer UK, a small sports wholesaler that specialises in football gloves for goalkeepers – from Sunday league goalies through to some of the Premier League’s top shot stoppers.
Among the goalies HO Soccer UK sponsor are Liverpool’s Adrian (not in goal the other night when Real Madrid scored five against the Reds at Anfield) and West Bromwich Albion’s promising Alex Palmer (currently injured).
Got it covered: Dave Small’s firm sponsors Liverpool keeper Adrian
Although Dave keeps his business operation – based in Wellington, Somerset – lean and mean, employers’ liability insurance is a legal requirement. It’s there just in case a worker is injured at work and decides to sue the business. If he doesn’t have the insurance in place, he could be fined £2,500 a day.
Despite the fact that providers include some household names – the likes of Hiscox and Zurich – premium inflation is rampant. Three years ago, Dave was paying £370 a year for the insurance. Last year, it cost £660 and for the year ahead, he’s just forked out £956, a year on year increase of 45 per cent.
Not surprisingly, Dave believes he is being taken for an insurance ride. Increasingly, he says, insurers will not offer employers’ liability cover unless public liability insurance and other forms of business insurances are also bought from them.
‘This is an issue that needs to be looked at,’ says Dave. It’s a view shared by FSB’s McKenzie. She told me: ‘We think the FCA should make sure the insurance market is operating properly for small firms, and it should intervene if it finds evidence of unjustified and unfair price hikes.’
On Friday, the FCA said the pricing of insurance cover in the small firms market was on its radar. Its recent intervention in the business interruption insurance market, the regulator said, had triggered the payment of claims totalling £1.5billion.
If you’re a small business owner, do let me know if you have been hit with the same kind of price hikes as Dave. Email: [email protected].
Research is welcome boost for income seekers
Lots of readers make their finances work by taking an income from their investments – be it Isas, self-invested personal pensions or their investment portfolios.
For these income seekers, an intriguing bit of research has just been published by wealth manager Stifel that might tickle their fancy.
Stifel has published a list of 25 equity based investment trusts that currently deliver an annual income of at least four per cent from a portfolio of UK or overseas stocks. ‘For those investors prepared to take equity risk, the [dividend] yields on these trusts are relatively attractive,’ it says.
Below is a table of the most income robust among these 25. To qualify, the trusts have at least ten years of annual dividend growth under their belt; have share prices not more expensive than the value of the underlying assets; and have the equivalent of at least half a year’s dividend tucked away in reserve. All nine pay income quarterly.
Of course, the dividends don’t have to be taken as immediate income. Instead, they can be reinvested for a time when the income tap needs to be turned on.
Without wishing to be patronising, these income trusts, listed on the London Stock Exchange, are long-term (not short-term) investments.
Cruel cost of travel cover if you are ill
My mother, Helen, is made of strong stuff. Despite an ongoing battle with cancer, she’s not for giving up yet.
A week ago, she was on fine form as I took her out for Sunday lunch at the Old School House Restaurant in Weeford, Staffordshire. She devoured her large glass of Chardonnay and healthy portion of lamb before I had even cut into my hake and taken a swig of my ginger beer (I was driving).
Like many people with serious medical conditions, Mum would love to do a bit of travelling before it becomes impossible to do so. But attempts by myself and younger sister Joy to book a cruise somewhere warm have been thwarted by the prohibitive cost of travel insurance. It all seems rather cruel.
Unfair: Pippa, Louise and Kate faced an £867 bill for travel cover
Kate Carr, from Hampshire, faced the same issue late last year when she wanted to take her older sister Pippa for a two-night stay in Brussels – along with younger sister Louise.
Pippa, 69, has terminal lung cancer, and like my mother wants to see more of the world before travel becomes an impossibility.
Although Pippa’s consultant said she was perfectly fit to travel – and was quite happy to sign a document that Pippa could then show to an insurer – travel insurance companies took an opposing view. Only after much searching did Kate manage to get cover for the three of them below four figures – £867 with Allclear, arranged through broker JD Travel. Most of that cost was a result of Pippa’s medical condition.
While grateful for the sterling work that JD Travel did in finding cover, the experience has left a sour taste in Kate’s mouth.
‘The cost of cover seems to me to be out of all proportion to the risk,’ Kate told me on Friday. ‘The likelihood of someone whose condition is stable requiring emergency treatment on a short trip must be very small. For people like Pippa who want to make the most of their limited life expectancy, the stance taken by the travel insurance industry seems somewhat cruel.’ Bang on the nail.
For readers with medical conditions who are looking for affordable travel cover, visit: biba.org.uk/find-insurance. I hope you find some – unlike Kate and my own Helen of Troy.
Never take what a banker says at face value
If you believed the banks, you would soon come to the view that there is no future for cash or high street branches.
Yet never take what a banker says at face value. On Friday, in announcing its 2022 financial results, building society Coventry said its branches had never been busier with customer visits up 160,000 on the year before.
‘Our branches [64] are a real positive for us,’ said chief executive Steve Hughes, ‘and a hub for the communities we serve.’
Last year, Coventry completed a £33million investment programme in its branches. What a contrast to the big banks which spent 2022 busily shutting branches and removing ATMs en masse. Good cop. Bad cops.
