Lifelines to SMMEs
Tony van Niekerk, Managing Editor, COVER Publications
This is one of the toughest times faced by small and medium enterprises for many decades
Not only are they facing unprecedented economic pressures, but the volatility and uncertainty on a socio- political front makes longer term planning almost impossible. As entrepreneurs, we are living in “fly by the seat of your pants” times.
2020 has been a major eye opener for many businesses when it comes to their insurance, the products they have, the brands they supported and the advice they received/ or did not receive.
On two fronts did this get exposed. Firstly, on the Business Interruption side. Here we can look at it from various angles. Some direct insurers came out early on with the news that they have paid all BI claims.
However, this actually exposed the limitations of their impact in the SMME market. Most of their clients did not have BI insurance and were therefore left out in the cold as far as insurance coming to their rescue, is concerned.
Then there were those who did have BI, but never included the extension that would include the pandemic and lastly, those who had done as much as they could, but still had to wait for the legal storm to pass. For many, it was too late when the pay day came. Their businesses were already gone.
Then there were the events, travel and entertainment businesses. Most of them, again, never took up insurance to cover cancellations or other unforeseen developments that may impact their income from events not proceeding. (Read the amazing story from KEU, Events and Entertainment Insurance specialist, on page 28.
They paid R90m in claims related to the pandemic and the stories from clients are amazing).
On the whole however, the same questions will be: did those without cover not accept advice or did they not receive advice on cancellations? Most people, myself included, have never really bothered with travel insurance, other than adequate health and evacuation cover. The risks seemed just so remote. Not so anymore.
Right now we have an opportunity, as an industry, to ensure we structure products suited to this ever changing environment SMMEs operate in.
Products that are flexible, adaptable and simple enough not to lead to long protracted legal battles when unforeseen events arise. We have the technology and we now know that, when the pressure is on, we can bend our own rules at very short notice.
From a broker perspective if you ever needed an opportunity to revisit client portfolios or knock on new doors, now is the time. Business operators should be willing to listen.
They are looking for solutions that provide some sort of certainty in a turbulent and uncertain world and, at this stage, insurance has the most suited solutions.
Make sure you read the SMME Feature on page 50, where we have a variety of commentators providing thoughts on the insurance needs of this most valuable economic sector of our country.