SMEs, ARE YOU COVERED FOR THE UNEXPECTED?

“Oh no, I didn’t think of it and I should have protected my company’s interests!”, a SME owner said during one of her conversation with a friend. Sharing her experience, she said she was very focused on getting her business going – sales, staff, customer relationships, rental and expenses – and, felt that she can save some money from not buying insurance for her business, and it is unlikely that the unexpected would derailed her operations.

SMEs, defined as companies that employ less not more than 200 staff, with a turnover of not more than S$100 million, stand at 271,800 registered entities in Singapore and responsible for 71.4% of the total employment¹. 

Compulsory by law, all companies that employ staff that does manual work, or earn $2,600 or less must buy the Work Injury Compensation (WIC) insurance. Besides this, most SMEs do not buy other form of insurance.

Why SMEs do not buy insurance for the company?

Generally, most SMEs do not buy insurance to cover the unexpected over their property or businesses. The attributing factors may include – one: “unnecessary additional expense”; two: don’t really understand why they need, and what to expect; three: accessibility to purchasing the policy without much hassle; and four: understanding the benefits that outweigh the cost.

Company protection is a necessity

In business, there are already many things the SME owners have to take care of, in order to manage the company. And, there are also many things that can go wrong that is either within or out of their control. No one can predict the future and that is why it is imperative to be well prepared. So, isn’t it better if protection solutions can be provided for the company in case something adverse occur – and, one less worry.

There are various solutions available for SMEs to consider for better coverage of their needs by different providers.

Business disruptions

Whether you are in manufacturing, retail, services, e- commerce or other industries, if you encounter unforeseen disruption to your business, you’d not only be unable to fulfil your commitments to customers, potential financial losses may ensue.

From cases of accidental loss or damage to your property such as fire, smoke damage and sprinkler leakage, to missing/damaged stocks or missing money at the business premise – these itself will have adverse consequences to your business.

Imagine if these are being compensated via the insurance protection you’d bought, that will lessen the financial burden. Some providers also compensate with daily cash for a specified period during the downtime.

Even for minor inconvenience of being locked out of the office, electrical and/or water leakage disruptions, you need not worry as 24-hour emergency workplace assistance services may be provided for the insured.

Who can advise, and how to get protection?

There are 2 ways where SME owners can seek advice from. They can ask for assistance from the providers’ financial advisers, or via their own insurance consultants, be they individuals or broking firms - saving business owners’ time and having their queries answered. For those that are already in the know of such insurance protection policy, business owners may also consider direct, simple and almost effortless journey via online purchase as offered by most insurance companies.

Cost versus benefits

Business owners would need to take a hard view of their company operations, and single out which part of the operations would require more protection than others, and decide on the costs of coverage versus the benefits of managing should the unexpected occur. For a few hundred dollars a month, mathematically it seems to make sense to select insurance plans that can cater to the risks in your business. For a relatively smaller amount of premiums as compared to the potential financial loss in an unfortunate event, let an insurance policy take over such a risk. This is the principle of risk transfer.