L&G says the gap now includes a corporate debt gap of just under £300bn, a shareholder protection gap of over £400bn and a key person protection gap of over £400bn.
As part of the survey Legal & General questioned members of the British Chamber of Commerce. The results show 44 per cent of business owners say that their business would fold within 12 months of the death or critical illness of a key person.
However, only 4 per cent of business owners questioned say they have shareholder protection in place and 48 per cent do not have any formal agreement to establish what would happen in the event of the death of a business owner.
Half of the businesses surveyed have corporate debt, but just 46 per cent of these businesses have life or critical illness policies in place to cover the money owed.
Legal & General head of specialist protection Clare Harrop says: “This is a big day for the business protection market. We now have up-to-date figures showing just how few businesses are prepared to handle an event such as the death or critical illness of a key person or business owner.
“It is the responsibility of the protection industry to get in front of corporate clients and make business owners aware of the importance and benefits of key person, shareholder and business loan protection. The market opportunity is there and the support from providers is there, so let’s get on and close that gap.”