Factory workers with face mask protect from outbreak of Coronavirus Disease 2019 or COVID-19. Concept of protective action and quarantine to stop spreading of Coronavirus Disease 2019 or COVID-19.
Fladgate’s Restart Capital report also reveals that one in five SME’s said their business is already in “distress.” Photo: Getty

One in three smaller firms (SMEs) and 43% of medium sized enterprises do not expect to be in business beyond a year, according to a new report.

The research by law firm Fladgate said its survey of 500 SMEs paints a “concerning outlook” for the backbone of the UK economy.

Fladgate’s Restart Capital report also reveals that one in five SME’s said their business is already in “distress.”

Meanwhile, 31% of respondents said they are still in a “shock and denial phase” or “anger and depression,” which may be hampering their ability to decide how best to move forward.

The survey highlights says that 72% of SME leaders are trying to raise money to ride out the storm, while 46% said they did not succeeded as hoped.

It also found that private investors are willing to deploy capital to support SMEs, with nine in 10 investors or 90% recognising SMEs are the key to the UK economy.

In terms of investment, 85% of investors want to play an active role in their investments, they said they see the highest potential in supporting troubled businesses, with over 50% admitting they had experience of working with distressed firms.

Investors are most interested in allocating capital to sectors hardest hit by COVID-19, the report said.

Construction, which SME leadership teams revealed had experienced a 39% hit to turnover is seen as the most attractive sector for investment, with 29% of investors keen to invest in this market. 

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As government support for businesses in the wake of COVID-19 is unwound, the majority of SMEs and investors seek more government support to

Lloyd’s has launched a new “first-of-its-kind” business interruption policy for small-and-medium-sized enterprises (SMEs), specifically designed to protect them against IT disruption or downtime.

Parametrix Insurance offers simple and reliable coverage by removing the traditional indemnity trigger that most insurance policies today use. Instead, the new solution uses a parametric trigger, meaning that the policy automatically pays out if a customer’s critical IT services – such as cloud, e-commerce or payment systems – are disrupted, said Lloyd’s in a statement, noting that this will significantly reduce the time insurers spend assessing a loss or adjusting a claim.

The new product is led by Tokio Marine Kiln (TMK) and supported by other members of Lloyd’s Product Innovation Facility including RenaissanceRe. It is the first off-the-shelf parametric IT downtime policy tailored towards SMEs, said Lloyd’s.

Yonatan Hatzor

“Businesses have shifted to managing most of their critical IT operations by using third-party service providers, thereby increasing their vulnerability to disruption,” said Yonatan Hatzor, co-founder and CEO of Parametrix Insurance.

“As a result, critical technology downtime has become the fastest growing risk for businesses today, whether you are a technology company or not. On top of this, the existing claims process in the field is complicated, expensive and time consuming,” added Hatzor.

“Parametrix’s approach addresses all these issues, providing a solution that saves both time and money, while making tech insurance accessible to new business segments. We are thrilled to launch the first ‘off-the-shelf’ parametric insurance product for IT downtime,” he said. “This is a great milestone for us, and we are grateful to TMK, Howden and Lloyd’s Product Innovation Facility for helping us to develop our product and providing us with valuable insights and support along the way.”

“We know that insurance products and services have to evolve to respond to the challenges of