BT Tackles Underinsurance in Business Segment

2 min read

On 19 May, BT is launching Key Person Income, an Australian-first income protection solution for small businesses.

Unique in the market, the new solution protects the revenue of a small business should a key person suffer from an injury or illness and subsequently cannot work.

Currently only 6% of all small businesses have any insurance in place to protect against the loss of a key person*. Furthermore, small businesses do not have an income-based product which protects revenue. This leaves the majority of businesses exposed to the revenue impact of the loss of a key person due to disability.

Small businesses comprise one-third of the entire business segment in Australia.^

“We saw that the biggest underinsurance gap for small businesses relates to key person insurance, so we’ve developed a solution with BT Key Person Income,” said Scott Moffitt, national manager, life insurance products at BT.

Key Person Income provides a monthly insurance benefit to a business for up to one year, if the business owner or key income-generating staff member becomes sick or injured and is unable to work to their full capacity.

“The backbone of the Australian economy is vulnerable to a range of risks,” Mr Moffitt said. “Disruption to management and operations, losing clients and contracts, a drop in business confidence and, ultimately, lost revenue – these are just some of the business issues that Key Person Income can address.”

How Key Person Income cover fits in the insurance mix

Two of the most popular types of business cover are public liability (held by 90% of Australian small businesses) and professional indemnity (39%).*

In addition to these types of business insurance policies, Australian businesses can manage death and disability risks with lump sum products. However, until now, no Australian insurer has provided an income solution for managing business risks related to short-term disability.

“Small businesses have been able to insure for negative financial impacts if a key person dies, or suffers from total permanent disability or a trauma event,” Mr Moffitt said. “These insurance products have focused on severe or permanent disability, yet businesses are more likely to be impacted by short-term disability. Key Person Income is an innovative product that addresses this business need.

“With the launch of Key Person Income, there is now an opportunity for advisers to help their small business clients with putting in place a risk management strategy to protect revenue in the event of short and long term disability,” Mr Moffitt said.

Additional information

What do small businesses think about key person insurance?

View a video of Jodie Fox, Co-Founder and Chief Creative Officer of Shoes of Prey, an Australian small business success story.

Shoes of Prey has revolutionised the way women shop for shoes by enabling customers to design their perfect shoes online – a value proposition that saw the business break even within months and achieve multi-million dollar sales within two years.

In this video, Ms Fox considers how illness or injury would impact Shoes of Prey.

She says: “We’re a very lean team, so every single person in our team counts, and every minute they put in counts towards our success. I’m not arrogant enough to think that our business wouldn’t go on without me. But as the face of Shoes of Prey and as one of the co-founders, there would be an impact to the way we are able to share Shoes of Prey with the world.

“There would come a time when we would need to ramp up again, whether that’s someone internally or bringing someone on – I think we would certainly find challenges.”

For more information, visit BT’s microsite ( for Key Person Income cover:

About BT
BT has been helping Australians prepare for the best since 1969. Its reputation is built on its expertise in superannuation, investment, insurance and advice.

* Source: DBM Business Financial Services Monitor. Base: Small business (2-19 employees, turnover less than $40m) (11,858). Surveys conducted Feb 2013 to Jan 2014. ^ Note: small business is defined as a business that has less than 20 employees. Source: Australian Bureau of Statistics,