Opportunities

Most companies have a business continuity plan and take out insurance to help protect their assets from fire, theft and so on. However, they can often overlook the need to protect their most valuable assets – their people.

Business protection can help to protect your client’s business should a director, partner, member or key employee suffer a critical illness or die.

There are three main types of business protection:

  • Key person protection - to protect against loss of revenue if a key employee dies or can’t work because they’re critically ill.
  • Ownership protection (also known as partnership and shareholder protection) - to help the other owners keep control of their business if a shareholder dies or is critically ill.
  • Loan protection - to help repay outstanding financial commitments, such as director loan accounts or bank overdrafts, if the worst should happen to a key person or shareholder.

While most companies have a business continuity plan and take out insurance to protect their assets from things like fire and theft, research shows that many are overlooking the need to protect their most important assets, the people in their business, against death or critical illness.  2014 government statistics tell us that there were a record 5.2 million private sector businesses at the start of 2014, the first time the business population has been over five million.  Of these, 99.9 per cent were small to medium enterprises, known as SMEs.  That's a lot of potential clients.

What's more, recent research tells us that the majority of these SMEs don't have any form of business protection.  Did you know 40 per cent of businesses would stop trading in under a year if a key person died or became critically ill?  Fifty-seven per cent of businesses have some form of business debt, of those who haven't protected their loans around half didn't see the need and a quarter haven't even thought about it. 

All of this highlights that there's a huge potential market out there for business protection that's still untapped, with thousands of businesses currently underinsured.  This means business protection could be a big growth area for your business and an excellent opportunity to demonstrate the value of your advice.  We want to help you make the most of business protection opportunities out there.  Whether you're familiar with the market or just getting started, you could already have many potential clients in your address book with business protection needs.

So what does a business protection client look like?  Thinking of your existing client bank, a good business protection client could be anybody, but it's most likely to be an owner of an SME type business.  Have you advised business owners on their mortgage or life and critical illness needs?  To start identifying potential leads in your database look out for key job titles, such as partner, director or managing director.  Look for clients who own and work in their business, such as hairdressers, plumbers, electricians and other skilled trades. 

An owner managed company is less likely to have what we would call a substitutes bench.  In other words, they're less likely to have someone who can come in and do the job as well as the employee who has died or is critically ill.  One of the things we actually build into our business protection products is a service that helps a company go out and find a replacement, both on a temporary and full-time basis.

We can make it easier to identify existing clients who would benefit from business protection.  Please talk to your sales consultant to find out more, or use the tools in our business protection planner.  Our business protection guides can also give you more useful hints and tips for setting up business protection plans.

Segmenting your client bank

You probably already have clients with business protection needs. Perhaps you’ve advised a company director on their mortgage or a business person on their critical illness cover.

To start identifying potential leads in your database, look out for:

  • Key job titles, such as partners, directors or managing directors.
  • Self-employed clients, especially sole traders who are also the key person – such as hairdressers, plumbers, electricians, and other skilled people.

Your sales consultant can help you segment your client bank and identify clients who would benefit from business protection. If you don’t have a sales consultant, contact us on 0345 6094 500 and we’ll help you.

Unlocking a chain of opportunities

Once you’ve identified potential leads among your clients, it’s important to consider other people in their businesses who would also benefit from business protection. For example, if a client is interested in ownership protection for their business, this is also a good opportunity to provide the same protection for any other directors – widening your client bank.

And a new business protection client could later benefit from your advice in their personal lives too.

Building professional connections

New business protection cases can also come from referrals from other professionals, such as solicitors, accountants and even general insurance brokers.

Solicitors are involved in business succession. So they could introduce you to their clients when they draw up shareholder agreements and partnership agreements to make sure these are properly funded.

Accountants see their clients more regularly than solicitors and they’ll be aware of the gross profits and fixed costs of a client’s business. They can refer them to you to discuss the risks associated with losing key people.

These professionals have a duty of care to their clients – so they should welcome your advice and expertise. If their clients are happy that everything has been done to protect their business, this will reflect well on them too.

Social media can be a useful tool to generate new leads. For example, you could use LinkedIn to search for professional job titles such as ‘accountant’ or ‘solicitor’ in your local area.

Marketing business protection to your clients

You can use our Marketing Studio to create personalised sales aids that can help your clients understand the importance of business protection.

And our approach letters can help you start the protection conversation.

Growing your cash flow

Business protection can be a great way to create more revenue for your business, as these plans tend to have larger case sizes. In 2018, our average annual premium for a personal menu plan was £374, while the average for a business menu plan was £1,217. There are also more opportunities for repeat custom with business protection.

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit royallondon.com.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.