Last year was a record-breaking one for new company formations, which totalled 19,472, up over 8.5% on 2014. It was the highest recorded in Ireland since the ‘noughties’, beating the previously recorded high of 19,306 in 2006*.

According to Vision-net, there was a 22% increase in new companies forming in the first half of 2016 compared with the same period last year. Between January 1 and June 28, 10,606 new companies and businesses were formed** – that’s an average rate of 1,767 formations per month and 58 per day.

It’s encouraging that new startups have been on the increase over the last few years. With all these newly formed entities, one might expect to see a jump in the amount of business assurance cover purchased. But this is not necessarily the case.

Financial Protection

While it’s an uncomfortable thing to think about, business assurance is one of the most important financial protections a business can put in place. It can ensure peace of mind, as it helps protect a company from the financial impact caused by the death of one of its key members of staff, directors or partners.

However, anecdotal evidence from speaking with Financial Brokers throughout the country is that not enough business owners give enough consideration to putting business assurance in place. The main reason is often a lack of awareness from business owners.

In Association with

When it comes to financially protecting their business, owners may tend to think of insuring tangible assets first and foremost, such as premises, machinery and stock, but they don’t always think of protecting their most valuable asset, their workforce.

Broker Expertise

While other forms of insurance may be more obvious or can sometimes even be a legal requirement, startup and more established business owners without business assurance may not have given it proper consideration, or may have even overlooked it completely.

With new companies forming every day, it seems there are many business owners who could benefit greatly from the expertise of someone, like a Financial Broker, who can advise them how they can best financially protect their business.

Mortality Probabilities

According to Vision-net’s Annual Review Business Barometer 2016, there are over 194,000 companies trading as normal in Ireland. Given that there’s a 24% chance that in a firm with two key people, one will die before the age of 65***, it’s concerning that so many businesses could potentially be leaving themselves exposed to serious financial risk.

For example, many are not fully aware of the consequences of not having cover in place. Most business owners will know that business debt remains a live issue and a growth inhibitor, and for many of them access to credit remains difficult.

However, in a situation where a director or partner passes away, the family of the deceased will more than likely inherit their share of the business, and the surviving partners and directors would have to source funds to pay them the value of this share. But with the current credit restrictions, this may prove difficult or impossible.

Tax Advantages 

Business owners may also benefit from receiving financial advice in other ways, for example in relation to the tax advantages and benefits relating to some types of business assurance cover, such as corporate co-director insurance.

If you’re a business owner who is considering taking out business assurance cover or would like more information to ensure that your business’s needs are being met, your local Financial Broker can provide advice on the best options available.

For more information, visit royallondon.ie or contact your local Financial Broker.

+ Written by Daragh Feely (pictured), Broker Sales Manager with Royal London

* Vision-net Annual Review 2016
**Vision-net Business Barometer Issue 294
***CSO Table 15 on Irish Life 2005/07; all assumed to be aged 40 and males