Vikash Maharaj, Key Individual Fairbairn Consult
Insurance reminders for SMMEs in a post-Covid economy
The success and growth of small, medium and micro-enterprises (SMMEs) is absolutely essential to the development of the South African economy and the insurance industry has an important role to play in assisting SMMEs to effectively manage risk.
In 2020 the Covid-19 pandemic and subsequent curfew and lockdown wreaked havoc on South Africa’s economy and the small business sector was particularly hard hit. Small businesses still operating, or contemplating reopening in 2021, feel pressure to retain as much free cash as possible in the business and could be tempted to cut their insurance cover to free up some cashflow.
The value of advice
In these trying times, it is essential that the insurance industry step forward and guide small businesses, especially those tempted to save money by buying less insurance cover than their actual risks require.
The key to managing business risk effectively and affordably is to partner with an insurer that understands the inherent risks in various industries and types of businesses. This also means partnering with an insurer who can partner with brokers effectively.
For small businesses especially, the value of individualised adviser advice cannot be overstated.
Insurance Advisers have the knowledge, experience and skills to guide SMMEs to identify the most critical risks their businesses face, guiding them to choose the correct insurance products to meet their unique requirements.
The importance of business insurance
Insuring business assets is a must, especially if a business relies on motor vehicles, owns a building, keeps inventory or valuable contents on its premises, or is reliant on electronic equipment.
For a manufacturer, protecting valuable stock during storage or transportation is essential. The priority for a motor fleet owner on the other hand, is comprehensive cover protecting specialist vehicles against accidents, theft or liability.
It is essential to understand whether a particular business needs property damage cover, fire insurance, business interruption cover, comprehensive motor insurance, legal liability or third-party cover, financial risk support, or theft, fraud or employee dishonesty protection – or a combination of these.
Regardless of their circumstances or type of venture, small business owners work under high pressure and have fewer margins for error, especially as technology, distribution and consumption patterns and priorities alter. Today, the cost of repair or replacement could be a major setback. Loss of profits can make it even more difficult to pay off loan instalments, retain cash for investment or meet other business commitments.
To continue to effectively support SMMEs to survive and thrive in today’s changing environment, the insurance industry should constantly research, enhance and develop the right insurance solutions. As risks become more complex and costs grow, the insurance industry needs to work harder to gain the trust of SMMEs, advising small businesses on where best to target their hard-earned money to safeguard themselves against potentially devastating setbacks.
Since the choices are overwhelming, comprehensive and effective small business cover can only be achieved with advisers qualified and experienced in specific industries, fields, services or types of businesses.
Given the far-reaching effects of small business failure on the broader economy, it is absolutely essential for advisers to partner with insurers who understand the risks inherent in a particular SMMEs’ field of business.
The industry’s relentless focus on advice, delivered directly through its comprehensive, fully supported adviser and broker ecosystems, presents South African SMME’s with a winning partnership. One that is focused on building the economy by supporting the sustainability of small and emerging businesses in these extraordinarily challenging times.