Protecting Businesses Tim Williams Senior Technical Development Consultant November 2008 UKD Learning & Development

Business Protection Agenda The barriers to the market A track to run on The necessary support

UKD Learning & Development The Market Estimated 4.5 million businesses in the UK. 1 Combined protection gap of £500 billion. 2 1 Department for Business, Enterprise and Regulatory Reform – Statistical Press Release August Swiss Re Insurance Report 2005

UKD Learning & Development The Market 63% Sole traders 25% Companies 12% Partnerships *Department for Business, Enterprise and Regulatory Reform – Statistical Press Release August 2007 Estimated 4.5 million businesses in UK*

UKD Learning & Development Why This Market? Opportunity to diversify Advice led More profitable Bigger cases, multi sales “Company cheque book” Easier to sign! Repeat business More professional

UKD Learning & Development The Barriers Where are the prospects? The “CJ” factor The “knowledge”

UKD Learning & Development Prospecting Existing client bank Self employed / sole traders / employers Professional connections Solicitors / accountants / tax advisers Chamber of commerce Business link centre

UKD Learning & Development Prospecting Mailing lists Your suppliers Local papers / Thompson’s / Yellow Pages Mail targets clients with pre approach letters Hold seminars Get positive feedback

UKD Learning & Development The “CJ” Factor Less control over corporate clients? Similar process to “domestic” clients Need to explore needs Need to recognise the consequences of not protecting… Need to develop “relevant knowledge”

UKD Learning & Development A Track To Run On Fact-finding “Tell me about your business?” “What were the problems?” “How far has it come?” “What about the future?”

UKD Learning & Development The Main Issues Loan protection Key person – identification and protection Succession planning Retirement planning

UKD Learning & Development The Need For Key Person Cover Replacement costs Business interruption Financial implications Who is on the subs bench?

UKD Learning & Development Replacement Problems Head hunters Relocation Training Package: Car Salary Bonus Shares? TIME! MONEY!

UKD Learning & Development Consequences… Loss of confidence… Bank manager Customers Creditors Staff

UKD Learning & Development Key Person Insurance Multiple of Salary? Percentage of profits? Can I get tax relief on this?

UKD Learning & Development So, Who Is A “Key-person? Anyone whose loss affects profit! Sales director? Purchasing manager? Technical director? Chief designer? It could be anyone!

UKD Learning & Development Insolvency Act 1986 Introduced the concept of “wrongful trading” If a company goes into liquidation….. Directors could be liable if…. They didn’t take sufficient steps to protect the company!

UKD Learning & Development Corporate/ Partnership Protection

UKD Learning & Development Corporate/ Partnership Protection Business Moral obligations Retaining control Resources to buy Dependants Replacement income Security of cash Market for shares?

UKD Learning & Development Types of Agreement Buy and sell Automatic accrual Cross (double) option

UKD Learning & Development Financial Underwriting Key person limits will apply Shareholder / partnership protection: Total cover triggers the limit, not individual All should effect cover In trust / life of another Appropriate agreement to ensure Insurable interest

UKD Learning & Development What About Retirement ? Foreseeable event Plan via endowments Regular premium / lump sum collectives Utilise ISA allowances Share buy back?

UKD Learning & Development Other Areas For Consultation Employee benefits Personal arrangements for business principals Personal guarantees Sole proprietor and redundancy liability Reviewing trusts PA 1890

UKD Learning & Development Our Business Protection Proposition A Dedicated Business Protection Team Same day service ‘High Net Worth’ Underwriters: Pre-application assistance: Personal case handler: On your terms:

UKD Learning & Development Contact Us Helpline: Webpage:

UKD Learning & Development Want more information? Find out more about Business Protection and access a whole host of useful downloads, by viewing our online seminar on 10 th December at 3.00pm. Add the event to your calendar by visiting the Seminar and Podcasts section on the Friends Provident Adviser site. Next Steps

UKD Learning & Development This presentation is based on Friends Provident's understanding of current law and HM Revenue and Customs practice which may change at any time. The value of any tax relief depends on the financial circumstances of the investor. FRIENDS PROVIDENT LIFE & PENSIONS LIMITED IS A MEMBER OF THE FRIENDS PROVIDENT MARKETING GROUP AND IS AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY This presentation is based on Friends Provident's understanding of current law and HM Revenue and Customs practice which may change at any time. The value of any tax relief depends on the financial circumstances of the investor. FRIENDS PROVIDENT LIFE & PENSIONS LIMITED IS A MEMBER OF THE FRIENDS PROVIDENT MARKETING GROUP AND IS AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY