Like a thunderstorm appearing out of a clear summer sky, the Coronavirus shook the world of business to its foundations. In just a few short weeks COVID-19 went from a news story regarding a Chinese city that most people had never heard of, to media saturation as it sped towards our shores. With over 290,000 confirmed cases and over 41,000 deaths in the UK, the human cost has been horrendous. Businesses and the wider economy have been dealt body blows too. According to the Office for National Statistics (ONS) the UK’s GDP shrank by a record 20.4% in April as businesses were forced to close their doors and over 8m workers were furloughed. Almost overnight businesses large and small either moved heaven and earth to set up their teams remotely or simply shut up shop and waited for the all-clear to sound.
Coronavirus: Business Disruption or Transformation
Now as we start to see the lockdown restrictions lifted and things are getting back to some sort of normality with shops and offices including Coversure offices reopening, we thought we’d take a look at what may happen next and whether this will mark a moment of long-term change for UK SMEs. Being one of the UK’s leading insurance brokers and having over 90 offices across the country, we are highly attuned to changes in the business landscape. Insurance is one of the sectors that is hit early when economic growth slows and is one of the first to see signs of recovery as requests for insurance cover come in. In the past few weeks we’ve seen plenty of both. From restaurants and shops looking to suspend cover while they are forced to remain closed to a surge of unoccupied property insurance quotes from landlords and, most recently, a spike in fleet insurance renewals as businesses get their vehicles back on the road. From the conversations we’ve had with both SMEs and larger businesses, there’s no doubting people’s keenness to get back to work. What’s less clear is how they will do that and whether this marks a sea change for UK PLC or a temporary hiatus. To see what the impact might be, let’s look at a few key questions and we’ll start with one from our own industry: will pandemic insurance become the norm?
Pandemic Insurance: A New Must-Have Cover?
At Coversure we knew that the crisis would make our phones ring off the hook. That’s why we were proactive in getting everyone moved to safe remote working early so when the lockdown announcement came, we were all set to help our customers with their questions. And, as predicted, the most frequently asked was, ‘Will my business interruption insurance cover me?’
The short answer, alas, was no. Very few policies have pandemic cover included in them – the specific cover required for the outbreak by insurers – and those that do are mainly taken out by large corporations. While this caused quite a lot of consternation at first, when we explained that it was the insurers’ decision and presented them with the options (and cost) for taking suitable cover out, most quickly shied away from it.
Will this change in the future? Given there are already reports in the news that outbreaks like this are likely to become more common thanks to globalisation and the effects of climate change, it’s got people worried. When the crisis hit it this was the must-have cover that everybody wished they had but few did. Whether this will change in the future largely depends on the insurers. As with any new policy – cyber insurance cover, for example – it starts out as being relatively expensive only to fall as demand rises and competition becomes keener.
Time will tell, but we’d suggest that some form of more affordable cover will be made available soon. As to whether it remains widely available and taken up is another matter. Cyber insurance is affordable, the threat ever-present and growing – over 50% of UK businesses were attacked in 2019 according to Hiscox – and yet take up of policies remains low with the majority of policy holders being those who’ve fallen victim to a cyber-crime. Ultimately, people’s memories are short and when it comes to renewing their business insurance, their desire to cut costs may trump their desire to protect themselves against another unlikely event.
The End of Office Working?
From a business’ perspective the lockdown will be remembered by many as the moment that they realised that remote working was a viable option. While remote working has grown steadily since 2000 with around 30% of people doing so at least part-time in 2019 and with the ONS predicting a pre-lockdown surge to 50% by the mid-2020s, it seems only now that its time has come. Advances in digital communication – Zoom, Teams and Meet etc. – the changing buying habits of customers and the movement of industries such as logistics into online process management, means that more can be done remotely than ever before. Add to this new-found feasibility the reduced costs, increased productivity and staff retention that remote working brings and there’s a compelling case for more and more of us to commute no further than our own homes.
A Transport Revolution?
Lockdown has inevitably curtailed movement of people. Shops and restaurants being closed has taken trucks off the road and public transport has seen its passenger numbers slump. An unexpected and very welcome consequence of this has been a drop in pollutants such as nitrogen dioxide (NO2) which have fallen by up to 40% according to a study by the University of York.
People have noticed this improvement in their standards of living and they are – unsurprisingly – keen to keep them. As we have noted before, diesels have been ailing since the VW scandal and the government’s recent decision to create a scrappage scheme with grants of up to £6,000 against new electric vehicles (EVs) will only hasten this decline. With EVs now common in cars and fast becoming available for commercial vehicle users and even truckers, the EV revolution looks a certainty.
Another interesting development is how many people are refusing to using public transport. We’ve certainly seen a rush of SMEs with fleets of all sizes requesting fleet insurance quotes so they can move their people around safely. Whether this fear of public transport will last is debatable; much will depend on whether we see the dreaded ‘second spike’ and whether social distancing is maintained. Many transport experts have seen this as yet another step down the road to shared ownership of vehicles. Services like Lyft and Uber have made many city dwellers question the need for their own vehicle and as hail and ride services become more common, and driverless cars come in – yes, they are coming to your town and sooner than you may think – then the whole transport scene will be turned on its head.
An Englishman’s Home Is His Castle, Office, Rural Idyll…
The property market has also been on a rollercoaster ride of late. The UK housing market started strongly in 2020 with relief over Brexit being done (for now) and optimism as to the UK economy’s future buoying what has been a sluggish market. The COVID-19 crisis sent markets into paralysis. With no agents open and no viewings allowed things quickly ground to a halt. As lockdown restrictions have lifted so there’s been an explosion of activity with renters seeking properties with outside space and buyers keen to make moves while the moving is good.
An interesting trend in his has been the redrawing of property hotspot map. London, so long the focus of the housing market has lost some of its momentum as younger, suddenly home-based workers have looked farther afield and seen what their hard-earned can get them in cities such as Nottingham, Bath and Hull. The rise of remote working has opened the door to workers have the job they want and the homelife they have dreamt of like never before.
Coronavirus: A Game-Changer for UK SMEs?
The crisis that has gripped us has been like none we have seen before. In many ways it has been worse than a war as a war can be brought to an end through either suing for peace or through outright victory. Neither of these has been an option here and the COVID-19 menace could – quite literally – hang in the air for years to come. Its principal legacy will be one of loss, but from a business perspective it may be one of disruption. Even if a cure were found tomorrow and COVID was added to the list of defeated threats humanity faces, the disruption caused, the new opportunities and changes to way we work will be long lasting and hard to reverse.
Like Some Independent Insurance Help?
If you would like to know more about saving on your insurance cover for your business or would like some help getting the insurance that’s right for you, then please contact your local Coversure office today.