By Sharon Paterson, CEO at Infiniti Insurance
The contracting economy, natural disasters, potential civil unrest, political uncertainty, financial greylisting, high inflation and interest rates are some of the complex risks threatening our Small and Medium Enterprises (SMEs) in the country today.
This is currently one of the most significant sectors of the economy, accounting for an estimated 64% of job opportunities in the country. Our SME sector needs more refined and evolving insurance offerings to grow and become resilient in this current difficult economic environment.
SMEs form a huge potential market for insurers. The technology and the products offered by insurers need to continually evolve to meet the new and changing demands of small businesses that are increasingly becoming more complex as the world changes rapidly.
Insurers must develop new products to keep up with the new trends in the market such as digitalisation or challenges such as climate change and geopolitical risks and disruptions. It is the high time we move away from offering traditional insurance products. We need to offer our clients innovative products that respond to their needs as they evolve.
Brokers also need to ensure that their clients are aware of all possible risks and make a conscious decision as to what risks they can absorb onto their own balance sheet and what risks they need to pay an insurer to take over from them. Always there needs to be a balancing act between the cover required and affordability. To ensure against possible losses that you as a client can easily cover yourself is to merely potentially reduce your profitability.
Every day we are discovering more things that we can do with technology. We need to analyse the data that we collect to determine the best means to benefit our partners and clients. New technologies have provided access to larger pools of data outside insurers’ own data sets, and this should assist in enhancing our underwriting and providing our clients with tailored solutions.
The role of the broker in assisting SMEs
Managing small businesses has its own demands and challenges, such as financial risks, reputation risks, liability risks, business interruption risks, and security risks. As a broker, it is essential to have a sound understanding and knowledge of your client’s attitude and ability to better manage risk, through CAPEX and risk management implementation measures, as well as the premium pay-away affordability position of the client in relation to this and his deductible and self-insurance payment affordability.
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The broker needs to have a thorough perspective of their clients’ three-to-five-year business plan and be able to align the cover provided around their clients’ abilities, needs and above all, the strategies for growth going forward.
There is a wide variety of business insurance coverages available to SMEs. So, after doing a risk assessment, the broker will be able to tailor the cover to protect the specific risks facing the business or risks that are related to the nature of the business or industry.
The broker will determine whether the business needs insurance coverage that protects against dynamic risks such as theft, fire, loss of profit or revenue, legal liability, business interruption, cyber-attack and power surge.
Discussion of a detailed quote with a client will essentially provide a client with a cost analysis. This will enable a client to decide where and how their hard-earned money is best spent and to avoid rand-swapping by insuring against losses that are likely to happen, expensive to insure for that reason, but will have a minimum impact on the SME’s balance sheet.
Without the right insurance cover, theft or any catastrophic event can cause devastating losses that businesses might struggle to recover from. A personal injury lawsuit can also leave a business struggling just to pay the legal fees. It is critical for SMEs to take the time to evaluate their needs and get appropriate coverage. The loss of a cell phone or a laptop will not.
SMEs and small businesses don’t always consider insurance essential unlike bigger companies, but the disruption of the COVID-19 pandemic, the KwaZulu-Natal floods, and the July looting made SMEs realise the need for protection due to uncertainty that can have a negative impact on the business. In such circumstances, a tailored insurance policy can be the solution to get the business back on its feet.
A tailored insurance solution can only be achieved by the relationship that SMEs have with the broker who likewise should have the ability to act as the bridge between the underwriter and the client. We at Infiniti Insurance continue to empower our brokers to help SMEs understand their own risks so that they can improve their risk management and reduce the cost of insurance.
Infiniti Insurance Limited is an A-(ZA)-rated non-life insurer writing general business personal and commercial cover as well as specialist lines including Aviation, Engineering, Construction Guarantees, Liability, Marine, Watercraft and Gap cover.
We pride ourselves on our strong partnership philosophy offering a diverse range of insurance solutions for the non-life insurance market. We focus on long-term partnerships with specialist entrepreneurs and independent owner-managed brokerages.