Techblog
Protect your business from economic uncertainty with business insurance
An adequate insurance plan can help protect a business and ensure long-term survival. SMEs should therefore assess the risks they face and ensure that they are properly insured.
One in seven smaller Singaporean SMEs, firms with five to 20 employees and revenue of less than $1 million, do not carry any business insurance at all, according to research conducted by QBE Singapore. This is especially concerning as the economic growth outlook has been widely expected to be slow.
Insurance as a necessity
Having adequate insurance can help mitigate related risks, said Karl Hamann, QBE Insurance Singapore’s Chief Executive Officer.
“With volatility expected to persist through much of the coming year, SMEs should seriously consider mitigating their business risk through comprehensive risk management. This ensures they continue to contribute to Singapore’s economic success, while operating their businesses with peace of mind,” Mr Hamann said.
It was also found that 53 per cent of SMEs are not interested in buying additional insurance on top of their minimum, mandatory coverage. This is because SMEs do not see insurance as a necessity – despite the fact that many SMEs acknowledge that having insurance helps improve their business operations. SMEs often rank insurance low on their list of priorities.
“This is an alarming fact given that these companies have run into more specific business issues like unfulfilled client payments and liability in the past 12 months. Operating with only basic, mandated levels of insurance leaves SMEs vulnerable and susceptible to risk brought about by more specific but equally common business issues,” Mr Hamann said.
The survey also highlighted that smaller SMEs are often less concerned about risk than larger SMEs and hence undervalue the importance of insurance and how it can better protect businesses.
No one-size-fits-all strategy with insurance
How should SMEs ascertain what insurance plan they need? SMEs should note that insurance is not a one-size-fits-all strategy. SME owners, also need to properly assess their business – especially the risks – with an insurer. This assessment would help SMEs gauge just what they need to adequately protect their business. This can range from protecting equipment against damage or theft or protecting against losses incurred from acting on poor advice. Insurance products and plans can be customised to the exact needs of each individual business.
Insurance can also help in cases of a disaster. For example, a business in Singapore that paid a premium of $1,240 per month received a claim of $20.6 million after its storage facility was burned down, guaranteeing business continuity even in the face of adversity.
It is therefore important that SMEs start operating their business around matters that are both short-term and long-term. Besides focusing on profitability, it will do well for SME owners to be adequately insured. This ensures their survival despite the grim economic outlook.
To read the full study conducted by QBE Singapore, click here.