Study reveals huge insurance gap for NZ businesses

Study reveals huge insurance gap for NZ businesses | Insurance Business

Study reveals huge insurance gap for NZ businesses

One in four small-to-medium enterprise (SMEs) owners and decision makers have no business insurance, it has been revealed.

According to the latest research by Vero Insurance, 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.

Suncorp New Zealand, which includes Vero, executive general manager of customer marketplace Campbell Mitchell 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,” Mitchell noted. “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 findings of the Vero Insurance Index further 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 cyberattacks;
  • 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,” Mitchell said. “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.”

The survey also suggests that many SMEs have no recovery plan in place should something go wrong.

Some SMEs said 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,” Mitchell explained. “Previous disasters have shown larger events can have a disproportionately severe impact on small businesses, which in turn can affect local economies.”

Another challenge facing the SMEs who had insurance was time pressure and isolation, with:

  • 35% stating they are trying to do everything on their own;
  • 34% saying they have no time for themselves or their family;
  • and 25% who 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,” Mitchell added. “A good broker can do a lot of the legwork for you when it comes to insurance, from working with you to identify key risks, to researching or recommending products that might cover you, to actually putting your insurance arrangements in place or handling your claims.”

 

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