McLoughlin notes the pandemic brought home the importance of protecting key staff in order to protect the business: "Companies now value their people in a different way than they may have done pre-Covid.
"That feeling of indestructibility that people thought they had before the pandemic has gone. Companies are now considering 'what happens if John gets ill?', 'what happens if Sarah is unable to return to work?'.
According to McLoughlin, from conversations he has had, the concept of key person cover has become more familiar than even five or 10 years ago.
Moreover, he says increasingly accountants are talking to clients about it and it is presenting a "great signposting opportunity" for accountants to pass clients to advisers to provide the solution.
Education, however, is poor
According to McLoughlin, however, there seems to be a general lack of knowledge among the general public as to the importance of key person cover.
He says: "There are not a lot of advisers who discuss this as part of holistic financial planning, and there is not a lot of education in general on this topic for business owners."
McCranor agrees: "Corporate protection has always been an area that business owners need educating on.
"The corporate protection conversation should be treated as a formality, in the same way you would approach a shareholder’s agreement or a company bank account."
Simply put, a business that is reliant on individuals needs to have adequate provisions in place, in the same way that a company with multiple shareholders needs to have adequate protection in place for the long-term succession of the company.
This is backed up by Alan Richardson, head of business protection and group for Lifesearch, who says although the pandemic has "helped focus business owners' minds on the importance of employee health", this has not fed through to a widespread take-up of key person cover.
He explains: "From conversations, it feels that many organisations have had to look to other ways of risk mitigation.
"This may be down to more flexible working arrangements resulting in less understanding or sight of what people are doing on a day-to-day basis, or better diversification of responsibilities across the workforce or, as with many clients, they simply used up what funds they had in the bank to self-insure."
Richardson also references the Swiss Re report, but says this felt like a missed opportunity to promote the importance of protecting companies’ profits.
"It wasn’t only the insurance sectors that could have done better.
"Lenders, banks, asset finance companies often over worked themselves, struggled to keep up with demand and were unable to apply focus on making sure the companies and the people they were supporting understood the importance of insuring their key person health.
