Sharon Paterson, CEO of Infiniti Insurance Limited
Small and medium-sized enterprises (SMEs) are the backbone of the South African economy, accounting for over 2 million companies and representing over 98% of formal businesses, according to the report from the United Nations’ National Entrepreneurship Strategy. How do small and medium business owners navigate the dynamic and often challenging landscape and a number of risks such as property damage, liability claims and business interruption and liability claim against them.
In South Africa’s fragile and unpredictable business environment, having adequate insurance coverage is paramount for small and medium businesses to succeed. The benefits of business insurance extend beyond financial protection, but it contributes to the business’ stability, credibility, and resilience. In its 2023 annual review report, the South African Insurance Association notes that a vast proportion of South Africans are underinsured, leaving them vulnerable to risks and unable to recover from losses.
In the event of a disaster or loss, a business may have to pay for repairs or replacements out of pocket. The cost of not having an adequate business insurance coverage can be significant and can leave the business vulnerable to financial ruin or even lead to its closure.
The persistent protection gap continues to vex the non-life insurance sector. Last year the Insurance Development Forum (IDF), estimated that staggering 90% of economic costs stemming from disasters in developing countries remain uninsured.
This unfortunate reality has severe consequences. When disasters hit, it can put a strain on the business’s finances and may even force it to close its doors leaving millions of people are at risk of losing their livelihoods and homes without financial compensation or the means to rebuild their lives.
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As the insurance landscape constantly changes, at Infiniti Insurance we remain committed to supporting you to adapt to the changes and meet the insurance needs of our mutual clients.
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Company registration number: 2005/029823/06
An Insurer licensed to conduct Non-life insurance
business and an Authorised Financial Services Provider
FSP Number 35914
Evaluating business risks and assessing insurance needs
When choosing small business insurance coverage, is critical to look at the size of the business. The more complex the business, the greater the exposure to risks. The broker must sit with the client to assess the risks and assist the client to choose an insurance policy that provides adequate coverage for their business’ assets and liabilities.
The broker should assist the client to determine what insurance coverage the business needs. If a business doesn’t have the right insurance cover, catastrophic events or even theft can cause devastating and potentially irrecoverable losses. Additionally, personal injury lawsuits can strain businesses financially, making it difficult to cover legal fees alone.
When evaluating the business risks, first, brokers acquaint themselves with the operations of the business as some industries are riskier than others. For example, businesses that manage hazardous materials or work with the public may need higher levels of insurance coverage than businesses that operate in less risky industries.
Secondly, the client must look at their specific insurance needs. Every business is different, so the client must choose an insurance policy that meets their specific needs.
The broker must visit the business premises, conduct a thorough inspection, and gain a firsthand understanding of the specific requirements. This comprehensive analysis will enable the broker to provide the appropriate cover for the client.
After conducting a risk assessment, brokers can tailor coverage to address specific risks associated with the nature of the business or industry. It’s crucial for SMEs to assess their needs and obtain appropriate coverage.
Knowing that the business is adequately protected against various risks and uncertainties provides peace of mind to business owners, associates, and their families. This allows them to focus on growth and strategic decision-making rather than worrying about potential financial setbacks. By investing in appropriate insurance policies, SMEs can mitigate risks and position themselves for success and growth in 2024 and beyond. At Infiniti Insurance Limited, we are committed 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.