Natural disasters rank well down the list of concerns highlighted by Kiwi SMEs, according to Vero’s most recent SME Insurance Index.
The index, which surveyed 900 small and medium-sized enterprise owners (SMEs) found that natural disaster ranked 15th on the list of business risks, with respondents more concerned about cost increases (33%), economic downturn (30%), workplace accidents (18%) and political instability (18%) among other risks.
Chris Brophy, executive manager business insurance at Vero, said one reason natural disasters might be less of a concern than other risks was that SMEs were confident they were insured against them.
“Given New Zealand’s experience over the past 10 years, it would be surprising if SMEs believed natural disaster damage wasn’t a possibility for them,” said Brophy. “But only 16% are concerned or very concerned about the potential impact of a disaster on their business.
“Natural disaster is one major risk that SMEs can mitigate with insurance cover and this research shows insurance is really doing its job of delivering peace of mind to SME owners.”
The survey revealed 47% of SMEs were confident their business was covered for natural disaster. SMEs who had insured through a broker and felt satisfied with the support and advice they were getting were even more likely to be confident (67%), compared to 39% of those who bought all of their insurance directly.
“The research suggests SMEs are gaining confidence from working with their broker, which is likely because they’ve had more in-depth conversations about their risk profile and their cover, and may have a better understanding of what their insurance will do for them if they’re affected by a natural disaster.”
Of those who were confident about their natural disaster cover, 84% said their broker had provided a risk assessment and recommended the most appropriate insurance, and 60% said their broker had recommended other changes they could make to minimise their risk.
The research also showed SMEs in the Wairarapa/Wellington region were the least worried about natural disaster risk, with 12% concerned compared with the survey average of 16%.
Brophy said this finding was surprising given the potentially higher risk of earthquake and other disasters in this region.
“This may be as a result of education and preparedness. Our results show those in Canterbury are most likely to feel confident about their natural disaster cover (68%), with 42% of Wellingtonians surveyed feeling confident.
“Aucklanders are the least confident, with only a third confident they are adequately insured against natural disaster risk. Perhaps the lower risk of certain disasters in that region means they are less likely to have engaged with their insurance cover and are more likely to be unsure of how well they’re covered.”
Similarly, industries that might be hardest hit by a natural disaster were most concerned about it, including accommodation and food services (39%) and agriculture and farming (32%). However, those industries were also the most confident that they were covered (62% and 66% confident respectively).
Vero’s customer data showed 97% of SMEs on its books had natural disaster cover as part of their policy. Brophy said there were a variety of reasons the remaining 3% might not have cover, for example natural disaster not being relevant to what they had insured.
Vero has recently added information on ways SMEs could minimise property damage caused by a natural disaster to its Risk Profiler tool, which provides industry-specific data on risks and how to reduce them.
