A recent survey of Australian small business has uncovered a disparity between the risks named by enterprise owners as most concerning, and their insurance coverage.

BizCover’s 2022 Small Business Bravery Report, which is based on a survey of 1327 SMEs in early 2022, says while cybercrime, data breaches or fraud were named the top risk by 31% of small businesses, only 7% of businesses had cyber insurance.

“The same pattern can be seen in the risks associated with losing key staff members. Despite a massive skill shortage across multiple industries in Australia and 22% of small businesses saying it was a concern, only 2% have Key Person Insurance,” BizCover said.

“It’s clear that there is plenty of room for small businesses to protect themselves from the risks that concern them.”

The top two areas of risk – cybercrime, data breaches or fraud and personal liability as a director or manager – made up a combined 57% of top risk responses from business owners, and BizCover says even where there was more correlation between concerns and cover, problems still arise.

While just over a quarter of small business owners were concerned about personal liability as a director or manager and almost a third had Management Liability cover, 70% were not covered for claims of wrongful acts in the management of their business.

“There’s a disconnect between the coverage small businesses have and their key concerns. Overall, there was low coverage across most areas of key concern,” the report said.

BizCover says underinsurance among specific types of coverage may be because it is not required by contracts or industry associations, yet even the most common coverage for small businesses was under represented.

“Any small business with physical interactions with a third party should consider Public Liability cover. Yet a third of respondents said they did not, and only 11% were concerned about the risk.”

Hospitality, Manufacturing and Trades were more likely to take out Public Liability while industries such as Financial, Legal & Insurance Services and Accounting, Bookkeeping & Taxation were the least likely.

“For those returning to the office or dealing with clients, customers or suppliers face-to-face, not getting this form of cover could be a risk in itself,” BizCover said.

While 53% of small businesses took out a Professional Indemnity policy, the least likely industries to have this cover were Architecture, Engineering & Technical Services and Health Services.

“Small businesses in these industries often give their service or advice for a fee. Therefore, the business could be held liable if a claim were made against them for losses because of actual or alleged negligent acts or omissions in the provision of the business’ professional service or advice,” BizCover said.

The survey also found 44% of businesses lost work or customers and experienced a revenue drop due to the covid pandemic, with Education & Training and Entertainment, Sports & Recreation impacted the most.

Almost half of Australian small businesses said their performance was good or very good in 2021 – despite the impact of multiple lockdown periods and supply chain and labour shortage issues.

“Small businesses are going to be a lot more robust. They have had to become more resilient, agile and innovative to survive the last couple of years, and they will be more prepared to take on new challenges,” BizCover CEO Michael Gottlieb said.