In November and December 2024, commissioned by the Polish Chamber of Insurance (PIU), the research agency SW Research surveyed 1,504 Polish small and medium-sized enterprises, enquiring about their greatest concerns and assessing the likelihood of their occurrence. What are the major concerns of business operators in Poland? These are any events related to business stability, such as an increase in operating costs, rising prices of fuel or energy. Other significant fears relate to the life and health of entrepreneurs, their associates and employees. The survey shows that as many as 69 per cent of respondents recognise insurance as an important element of a strategy to secure their business.
The researchers asked 1,504 entrepreneurs about more than 40 unfavourable events that might possibly befall them in the course of their business. In regard of each event, the respondents were asked two questions: “How afraid are you of this particular event?” and “How likely do you consider this event to occur?”
The entrepreneurs’ main concerns relate to the stability of their business
Polish entrepreneurs are most concerned about events related to the stability of their business: an increase in operating costs, such as prices of fuel (66 per cent) and energy (63 per cent). At the same time, they perceive these risks as those most likely ones to materialise (68 and 69 per cent, respectively). Events related to the loss of customers’/counterparties’ trust in the aftermath of liquidity problems are of relatively least concern. Still, they are perceived as a significant and likely risk by one in four entrepreneurs in Poland.
Life and health – second important group of concerns
Entrepreneurs are most concerned about events that may permanently affect their ability to operate their business, such as the death of an associate (as many as 56 per cent of the respondents) or a serious accident suffered by an entrepreneur (46 per cent of the respondents). More than a third fear a prolonged illness, influenza or other infectious disease (35 per cent).
A serious illness of a key staff member is a source of concern for 33 per cent of the respondents. Influenza or other infectious disease of employees is feared by 32 per cent of entrepreneurs, while the death of a key employee – by 30 per cent.
– The level of illness and health concerns is higher than the perceived probability of these events occurring – the entrepreneurs see these events as potentially more harmful than realistic. Moreover, accidents or illnesses that affect entrepreneurs personally cause greater concern than those affecting employees – says Jan Grzegorz Prądzyński, President of the Management Board of PIU.
Almost half of entrepreneurs fear that, should they become seriously ill themselves, they will run out of money for treatment (48 per cent, while 45 per cent deem this scenario probable). More than half of them (53 per cent) believe that enrolling employees in private healthcare is advisable.
More than half of entrepreneurs declare that they must work despite infections, e.g. influenza, while 33 per cent claim to use medical services offered under private health insurance. 30 per cent of them emphasise that they would be willing to take out private health insurance for employees if it enabled them to use associated tax benefits. This is very important, especially given the fact that, until recently, private group health insurance had been taken out predominantly by larger companies.
Entrepreneurs’ statements concerning their pension schemes are also of importance. As many as 45 per cent of entrepreneurs believe that, as things stand, they will have less money for their retirement than if they were employed by someone else. Almost half of entrepreneurs (49 per cent) recognise Employee Capital Plans (PPK) and Employee Pension Schemes (PPE) as useful tools for securing their employees’ retirement. As many as 69 per cent of them view the state pension system as useful.
Future of business
In the survey, we also examined entrepreneurs’ concerns about the future of their business. The major ones involve the fear of insufficient competitiveness (36 per cent) and legal changes (34 per cent) that may affect their business. According to the respondents, the probability of such events occurring is similar to the threat they pose (39 and 34 per cent, respectively).
In contrast, entrepreneurs are the least afraid of the departure of key staff or the loss of a business licence (25 and 20 per cent, respectively). A less important but still significant financial risk is associated by entrepreneurs (28 per cent) with a lack of funds to pay employee salaries.
35 per cent of entrepreneurs are afraid of losing their liquidity and 1/3 consider this scenario probable. 36 per cent of the respondents are concerned about the insolvency of their contractors and 50 per cent say they would have to close their business if key customers failed to pay them on time. 20 per cent of the respondents admit that they would be able to operate at a loss for the next year, while 29 per cent admit to holding a few months’ worth of funds secured for employee salaries, leasing costs, etc.
– Almost half of entrepreneurs appreciate the available financial tools that help companies retain liquidity. 48 per cent of them see factoring as a convenient option of supporting liquidity, and 45 per cent believe that trade credit is an effective way to manage company finances. As many as 43 per cent of the respondents cannot conceive of doing business without trade credit insurance. Interest in these tools has been visibly rising for several years now. This shows that economic operators are getting increasingly better at managing payment risk. Interest in credit insurance is growing and companies that already benefit from this form of insurance are expanding their businesses. Insurance companies provide economic information and assist in managing trade credit limits for individual recipients of goods and services. They also participate in the recovery of compensation payments in the event of non-payment of an invoice. Thanks to these tools, companies are able to remain profitable – says Jan Grzegorz Prądzyński.
Entrepreneurs are feeling the pressure of market changes, such as inflation (48 per cent), high fuel prices reducing business profitability (43 per cent) and high electricity prices, which have forced them to increase the price of goods or services (42 per cent).
Perception of property- and money-related events
Entrepreneurs are particularly concerned about situations involving the failure of key equipment (41 per cent) or damage to a company car (38 per cent). At the same time, they perceive these events as the most likely ones to occur (37 and 39 per cent, respectively). In turn, 36 per cent of entrepreneurs are concerned about the theft of a company car and a similar percentage (35 per cent) of them view this as a likely occurrence. One third of entrepreneurs fear a prolonged business interruption caused e.g. by fire (30 per cent) and a similar percentage (29 per cent) of them view this as a likely occurrence. Theft or misappropriation in the company is feared by 34 per cent of the respondents, and this scenario is viewed as likely by 33 per cent of them.
Entrepreneurs are concerned about digital risks: data loss (36 per cent), cyberattacks (35 per cent) and leakage of sensitive data (34 per cent). They believe that the likelihood of such events is similar (34, 34, 32 per cent, respectively). However, the most likely event, according to entrepreneurs, is an attempt to extort money (35 per cent).
Perception of environmental events
Climate change is feared by 43 per cent of entrepreneurs and half of them consider the scenario likely. More than half of entrepreneurs (56 per cent) recognise the global nature of this change and believe that it affects everyone to the same extent. At the same time, however, almost the same number of respondents (55 per cent) believe that the problem does not concern them personally, as there are no natural disasters in their locality. Besides, only one third of entrepreneurs fear climate disasters as such, and 41 per cent consider them likely.
Drought and heavy rain are on the risk radar of 43 per cent of respondents and half of them recognise such events as likely threats to their business.
– It is worth noting that almost 42 per cent of the respondents acknowledge the impact of their business on the environment. This may indicate a need to raise the awareness of their own climate impact. However, it is worrying that many Polish entrepreneurs still view the risks associated with climate change as quite abstract. Underestimating these risks may lead to underinsurance – says Jan Grzegorz Prądzyński.
Entrepreneurs and insurance
More than 2/3 of entrepreneurs (69 per cent) acknowledge the key role of insurance in protecting against unforeseen events such as fire, theft or accidents.
Of every type of insurance, entrepreneurs recognised third-party liability insurance of company cars as the most useful one for their business (84 per cent), while 73 per cent of them conceded that voluntary motor hull insurance was useful. 79 per cent of the respondents consider insurance of the company’s property useful. Still, only 31 per cent of them insure machinery and equipment, and 29 per cent claim to have taken out electronic equipment insurance.
Life insurance is recognised by entrepreneurs as very useful, either with regards to their associates (80 per cent), or themselves (77 per cent). As many as 74 per cent of them perceive income protection insurance as useful.
– Unfortunately, entrepreneurs’ declarations diverge from the fact that company-specific risks are not fully insured in Poland. This underinsurance is exacerbating as we continue to feel the effects of inflation and the rising costs of materials. Only slightly more than half (53 per cent) of entrepreneurs declare that this needs to be factored into sums insured. In turn, as many as 44 per cent of them indicated that gross book value was a good way to calculate the sum insured for company assets. At the same time, it is those very entrepreneurs that insure at gross book value (rather than replacement value) that are mainly affected by the problem of underinsurance – explains Jan Grzegorz Prądzyński.
Who did we ask?
- Half of the micro, small and medium-sized enterprises surveyed employed between 1 and 9 people, 41 per cent between 10 and 49 people, and 9 per cent between 50 and 249 people.
- 75 per cent of the surveyed entrepreneurs had been in business for at least 5 years.
- 88 per cent of the respondents had an annual turnover of less than PLN 9 million, 9 per cent between PLN 9 and 45 million, and 3 per cent between PLN 45 and 195 million.
- 55 per cent of the respondents were sole proprietors, while 23 per cent of them were limited liability companies.
- 49 per cent of the respondents were engaged in service activities, 28 per cent in trade, 15 per cent in manufacturing, and 8 per cent in consultancy.
- The largest group of respondents were graduates of secondary (46 per cent) and tertiary schools (41 per cent).
- Almost one in four of the respondents operated in the countryside or in towns with up to 20,000 inhabitants and almost as many operated in towns and cities with more than 100,000 inhabitants.
The detailed results of the survey will be included in PIU’s broader study on small and medium-sized companies and their insurance needs.
The survey is a continuation of the “Polish Risk Map” research series commissioned by the Polish Chamber of Insurance and conducted between 2020 and 2022.
