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Insuring SMME Success

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Lana Ross, Chief Operations Officer, Discovery Business Insurance

The civil unrest in KwaZulu-Natal and Gauteng has reminded us why having adequate business insurance is essential to protect every business.

 

An estimated 40 000 businesses were affected in KwaZulu-Natal alone. Total losses to the economy are estimated at R50 billion, and the damages could be between R15 billion and R20 billion for the South African Special Risk Insurance Association (SASRIA). It indicates that many businesses in South Africa are either underinsured or uninsured.

The riots had a devastating impact on employment, with an estimated 105 000 people losing their job. This period has shown that unexpected events can happen that result in huge losses for the business; as a result, business insurance is required to protect companies and help them survive.

SMMEs are most affected

Most of the businesses affected by the civil unrest are small, medium and micro enterprises (SMMEs). Research indicates that SMEs make up 89% of affected businesses, which is a major hindrance to economic growth, seeing as SMMEs contribute significantly to the economy.

Before the pandemic, SMMEs contributed as much as 40% to the GDP in emerging economies. Data collected in 99 countries, including South Africa, indicates that SMMEs are key drivers of employment, contributing 70% to total employment (before the pandemic. It is, therefore, important SMMEs get the support they need to succeed, continue to create employment, and contribute to the economy.

The need for unique insurance solutions

SMMEs have unique insurance needs, including cover tailored to the size and nature of the business. They also need access to resources and unique solutions that can help them better manage their risks and grow their businesses.

Newer insurance solutions consider the business holistically. Insurers must enable businesses to assess their physical and operational risks to get an overview of their risks and the required insurance solutions. After completing an assessment, businesses can get recommendations where they can improve and get access to service providers at discounted rates, to help them improve in these business development areas.

Cover for emerging risks

There has been a recent increase in digital network use by SMMEs. The Endurance International Group surveyed Indian SMMEs to understand their adoption of digital processes during the Covid-19. The survey indicated that more than 50% of SMMEs were using digital platforms to remain connected during lockdown.

This increase in digital adoption increases cyber risks. As employees use digital platforms more than before, the risk of reputational damage to the company, as well as legal risks, may also increase due to employee conduct on these platforms. Many SMMEs do not have the sophisticated cyber protection and reputational risk cover of larger organisations. They may also find legal assistance unaffordable. This can put them at higher risk of business interruption if an event that results in cyber losses or damage to their reputation occurs. This may result in business failure, which is why it’s important for SMMEs to partner with an insurer that can provide these covers and benefits at an affordable premium.

At Discovery, we include cyber cover, reputational risk management, and legal services as part of the insurance offering. This can help clients recover quickly following an insured event. It is proactive insurance solutions like these that can make all the difference in helping SMMEs grow.

Discovery Insure Ltd is a licensed insurer and an authorised financial services provider. Registration number 2009/011882/06. Product rules, terms and conditions apply. Visit www.discovery.co.za for more details or call 011 529 6620.