Vero Insurance research shows one in four small to medium enterprise owners and decision-makers (SMEs) have no business insurance.
It comes as part of the second edition of the Vero SME Insurance Index, which delves into the insurance market for New Zealand SMEs and identifies opportunities for insurance brokers to partner with businesses to add value.
Those SMEs without business insurance said the cost of insurance (47%) and the perceived lack of benefits (33%) were the two main reasons for not having any cover.
Campbell Mitchell, Suncorp New Zealand’s executive general manager of customer marketplace, which includes the Vero brand, said while insurance was commonly seen as a grudge purchase, the risks of not being insured could be crippling for a business.
“A lot of SMEs might be missing out on the benefits of both insurance and the business partnership that having a good relationship with an insurance broker can offer.
“And when you look at the main concerns of those SMEs that do have insurance, you can really start to see the value insurance provides.”
The survey revealed that:
• 38% of SMEs with insurance are concerned about being unable
to trade for a long period of time
• 26% are concerned about a business owner or key employee
taking time off work
• 24% are worried about cyber attacks
• 23% are worried about natural disasters.
“Those are all insurable risks, and if they are a concern, it’s a good idea to talk to a broker about how you can protect your business or your income if something goes wrong,” Mitchell said.
“Developing a partnership with a broker means you have someone in your corner who knows your business inside and out, and can ensure that you’re making the best decisions to protect what you’ve built.
“One of the concerning findings from this part of the research is that many SMEs with no insurance simply aren’t sure what they would do if something went wrong.”
Some SMEs indicated they would self-insure (15%) or get a bank loan (3%) but 23% did not have a plan at all.
“31% of the SMEs we spoke to thought their business might shut down if a major negative incident occurred,” Mitchell said. “Previous disasters have shown larger events can have a disproportionately severe impact on small businesses, which in turn can affect local economies.”
Findings from a 2015 report by Deloitte Access Economics into the Canterbury Earthquakes showed that 75% of the money Vero paid out in the years following that disaster was to commercial clients, and that claims payments facilitated continued trade for many businesses that were forced to reduce capacity or shift premises.
Another challenge facing the SMEs who had insurance was time pressure and isolation.
• 35% stated they are trying to do everything on their own
• 34% said they have no time for themselves or their family
• 25% identified managing their time as a major challenge.
“If business owners are facing time pressure, partnering with an insurance adviser or broker can really take a load off,” said Mitchell.
“A good broker can do a lot of the legwork for you when it comes to insurance, from working with you to identify key risks, to researching or recommending products that might cover you, to actually putting your insurance arrangements in place or handling your claims.”
