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Risky business

ARTICLE BY

  • Sharon Paterson
  • CEO
  • Infiniti Insurance

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“It is important for businesses to consider their insurance needs carefully and to purchase the appropriate policies to protect themselves from potential losses.”

Businesses are constantly facing risks and uncertainties that can have a significant financial impact on their operations. Insurance is a critical component of business continuity, as it can help mitigate these risks and protect businesses from financial losses.

In recent months, there have been several high-profile incidents where businesses have been severely affected by unexpected events, such as the gas explosion and fire in Johannesburg that killed 74 people. These incidents have highlighted the importance of businesses having adequate insurance in place to protect themselves from financial loss.

Extreme weather conditions and catastrophic events

With extreme weather conditions caused by climate change, KwaZulu-Natal was once again on the front lines, with unprecedented flooding and wildfires hitting Richards Bay within weeks of each other this summer. Recently the Western Cape province suffered flooding in several areas, leaving multiple roads closed, and having an impact on livelihood and businesses. A freak hailstorm in Johannesburg caused damage to buildings and vehicles.

This summer, we will likely experience severe and extreme weather events and high frequency and scale of natural catastrophic events due to climate change. This may lead to high losses for businesses that have not put mitigating steps in place. Mitigating measures include undertaking regular repairs or maintenance, managing encroaching vegetation and gardening to reduce the risks of fire and other extreme weather events that can ravage their properties.

Load shedding and imminent water shortages

As businesses are already grappling with an ongoing electricity shortage, the World Economic Forum (WEF) has flagged water shortages as the third highest risk facing businesses in the country. South Africa is the 30th driest country in the world and in recent months, some municipalities have experienced water outages. Residents and businesses in these areas were wholly reliant on water tankers for supply. All these shortcomings and infrastructure constraints pose significant risks for businesses.

As loadshedding persists and many clients resort to installing solar systems at their business premises or homes, they need to review their insurance coverage and put in place risk preventive measures to mitigate the risks of theft or fire.  Clients need to know what their insurance will cover after installing these systems and what insurers require for cover to be in place, for example, an updated electrical certificate.

It is important for businesses to consider their insurance needs carefully and to purchase the appropriate policies to protect themselves from potential losses. Businesses should also regularly review their insurance policies to ensure they are adequately covered to meet their needs.

Having the right insurance protection in place can provide stability and certainty for the business. This will also help the management to focus on the important task of growing the business without having to worry about financial losses that can be caused by an unexpected tragedy.

The role of brokers in helping businesses

Brokers play a significant role in helping business owners understand the number of insurance products available and how they can protect their assets. The client must discuss their business continuity plan with their brokers. This will allow the broker to help business owners take steps to mitigate risk and protect their bottom line.

Clients need to be advised of the new emerging risks and how they can protect themselves against them. For example, the Department of Transport’s draft Road Accident Fund Amendment Bill, 2023 which was gazetted in September, contains a number of significant changes. The proposed changes may have far-reaching implications for clients and for the motor insurance industry if enacted in its current form.

Business owners need to collaborate with their brokers at any stage of planning to develop mitigation strategies that can reduce the damage from a disaster or tragedy to their properties. Implementing those strategies before a disaster may make it easier for the business to recover the losses. 

Brokers must advise their clients to familiarise themselves with the legislation that applies to their business to ensure that they comply. Firstly, this will ensure that their insurance policy responds if they have a loss and secondly, it will help them not to find themselves facing a culpable homicide case if someone dies in a fire that started on their premises.

At Infiniti Insurance, our solutions are carefully developed in consultation with our broker partners by helping them in managing their clients’ risks and create seamless, personalised, and efficient service. Our core business is a fundamental understanding of the client’s risk, being able to tailor a specific policy to suit their needs and then helping in the management of risk.

We focus on building long-term relationships with brokers and clients and actively work towards the prevention of loss, as well as educating clients on how to avoid or mitigate losses.

Our relationship with our brokers is the cornerstone of our business, and this is also where knowledge is shared. Our brokers are well-placed to provide our mutual clients with information on various risk mitigation strategies, some of which can be remarkably simple and easy to implement.

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