Vero Insurance today released research that reveals one if four small to medium enterprise owners and decision makers (SMEs) have no business insurance.
The surprise finding comes as part of the second edition of the Vero SME Insurance Index, which delves into the insurance market for New Zealand SMEs and identifies opportunities for insurance brokers to partner with businesses to add value.
Those SMEs without business insurance said the cost of insurance (47%) and the perceived lack of benefits (33%) were the two main reasons for not having any cover.
Campbell Mitchell, Suncorp New Zealand’s Executive General Manager of Customer Marketplace, which includes the Vero brand, said while insurance is commonly seen as a grudge purchase, the risks of not being insured could be crippling for a business.
“A lot of SMEs might be missing out on the benefits of both insurance and the business partnership that having a good relationship with an insurance broker can offer.
“And when you look at the main concerns of those SMEs that do have insurance, you can really start to see the value insurance provides.”
The survey revealed that:
- 38% of SMEs with insurance are concerned about being unable to trade for a long period of time
- 26% are concerned about a business owner or key employee taking time off work
- 24% are worried about cyber attacks
- 23% are worried about natural disasters.
“Those are all insurable risks and if they are a concern it’s a good idea to talk to a broker about how you can protect your business or your income if something goes wrong.”
“Developing a partnership with a broker means you have someone in your corner who knows your business inside and out, and can ensure that you’re making the best decisions to protect what you’ve built.”
Many small businesses have no recovery plan in place
“One of the concerning findings from this part of the research is that many SMEs with no insurance simply aren’t sure what they would do if something went wrong,” said Mr Mitchell.
Some SMEs indicated they would self insure (15%) or get a bank loan (3%) but 23% did not have a plan at all.
“31% of the SMEs we spoke to thought their business might shut down if a major negative incident occurred,” said Mr Mitchell. “Previous disasters have shown larger events can have a disproportionately severe impact on small businesses, which in turn can affect local economies.”
Findings from a 2015 report by Deloitte Access Economics into the Canterbury Earthquakes showed that 75% of the money Vero paid out in the years following that disaster was to commercial clients, and that claims payments facilitated continued trade for many businesses that were forced to reduce capacity or shift premises.
Time pressure a major challenge for small businesses
Another challenge facing the SMEs who had insurance was time pressure and isolation.
- 35% stated they are trying to do everything on their own
- 34% said they have no time for themselves or their family
- 25% identified managing their time as a major challenge.
“If business owners are facing time pressure, partnering with an insurance adviser or broker can really take a load off,” said Mitchell.
Online national survey conducted by BrandMatters in November 2017.
901 respondents who met survey criteria were surveyed about insurance for the SME Insurance Index. 2504 respondents began the survey, and 623 who did not have business insurance were asked follow-up queries.
*According to MBIE data, 97% of New Zealand businesses contributed $232 million dollars to New Zealand’s GDP in 2017.
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The information in this article has been compiled from various sources and is intended to be factual information only. Full details of policy terms and conditions are available from Vero Insurance New Zealand Limited or your financial adviser. For advice on product suitability, please contact your financial adviser. While we take reasonable steps to ensure that the information contained in this article is accurate and up-to-date, it is subject to change without notice. Vero Insurance New Zealand and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.