Managing and operating a profitable small enterprise in South Africa isn’t any small feat. Entrepreneurs face a wide range of challenges at totally different phases of their enterprise’ journey.
“One problem that emerges proper from the beginning, nevertheless,” says Karen Rimmer, Head: Distribution at PSG Insure, “is the duty each enterprise proprietor has to grasp their distinctive threat exposures and discover methods to be as ready as potential for the sudden.”
Fable 1: Insurance coverage advisers are simply product specialists
One of many greatest myths that exist within the small-to-medium-enterprise (SME) insurance coverage house, is that short-term insurance coverage is easy sufficient to warrant taking a DIY strategy. A giant a part of this false impression is rooted in the concept insurance coverage advisers are merely intermediaries, and that chopping out the intermediary could save worthwhile cash and sources.
“It’s essential to grasp that insurance coverage advisers are seasoned professionals,” explains Rimmer. “They bear obligatory and ongoing coaching and improvement so as to perceive the intricacies of the danger panorama. As such, their function includes far more than simply promoting insurance coverage merchandise. Armed with probably the most in-depth data on trade developments and occasions, they’re additionally threat and enterprise specialists in their very own proper.”
That is significantly true throughout the context of the present laborious market, which is characterised by increased insurance coverage premiums, extra stringent underwriting standards and the comparatively diminished capability of insurers to shoulder increased ranges of threat.
“Stricter underwriting usually leads to coverage wording being reviewed and made extra specific by way of what the shopper’s tasks are. Right here, advisers can help in serving to shoppers navigate trade terminology and achieve a clearer understanding of what they’re anticipated to do to stop losses,” she says.
Fable 2: Solely giant corporations can profit from short-term insurance coverage
One other fantasy is that solely giant corporations have to have short-term insurance coverage, as they’ve comparatively bigger threat exposures as a result of dimension of their workforce, enterprise premises and firm tools.
“The fact, nevertheless, is that bigger corporations usually have extra in depth useful resource swimming pools, larger entry to emergency funds and the collateral they might have to safe financing within the occasion of an sudden catastrophe,” says Rimmer. “However, for small companies, the potential loss that follows dangers like cybercrime, looting, hearth or employee-related damages will be irreversible.”
Insurance coverage for enterprise interruption was a lifesaver for a lot of small companies who took a prudent strategy to managing unexpected dangers just like the Covid-19 pandemic. Within the case of the July riots, small companies who had taken out a SASRIA coverage extension previous to the occasion, benefited from the protection internet that this very particular cowl offered.
“In instances reminiscent of these, having the fitting sort of insurance coverage cowl usually made the distinction between a enterprise being compelled to shut its doorways or having the ability to recuperate its losses sufficient to stay operational,” she says.
Fable 3: Insurance coverage cowl is a one-size-fits-all settlement
One other false impression is that insurance coverage insurance policies are fastened and that insurers are rigid by way of the price of the month-to-month premium and the character of the duvet accessible to small companies. Actually, insurance policies will be tailor-made to go well with the distinctive threat profile of an SME, in addition to its stage of affordability.
“Right here, the function of the adviser is to assist enterprise homeowners assess what they’ll afford, based mostly on the dangers that lie forward and the way they place their enterprise in a means that mitigates any type of future enterprise interruption,” explains Rimmer.
In some instances, to maintain the value of the premium as little as potential, small companies select to self-insure sure gadgets. Others could elect to tackle bigger excesses to chop the month-to-month price of the premium. The essential issue to contemplate right here is that advisers, geared up with the fitting data and knowledge on what an organization’s wants are, can assist tailor insurance coverage to satisfy the distinctive profile of the shopper.
Fable 4: Enterprise insurance coverage shouldn’t be reasonably priced
“The parable that short-term insurance coverage is unaffordable for small companies is decidedly short-sighted,” says Rimmer. “Whereas a premium could have an effect on the cashflow of a enterprise within the quick time period, paying month-to-month premiums is much extra reasonably priced and manageable than overlaying the alternative worth of premises, an organization car or the price of litigation, ought to a disaster hit. Taking the long-term view and excited about insurance coverage as a means of making certain {that a} enterprise is about as much as final for the lengthy haul is subsequently important.”
Danger and the highway forward
The inflow in requests for quotations from small companies in a variety of sectors is testomony to the truth that enterprise leaders are realising the significance of managing threat as a matter of precedence.
“In a tough market like the present one, advisers are in the most effective place to assist small companies navigate the disaster and futureproof their ventures towards ongoing enterprise dangers,” concludes Rimmer.
