One in four small to medium enterprise owners and decision makers (SMEs) in New Zealand have no business insurance, according to research findings released 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.
The findings are 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.
Mr Campbell Mitchell, Suncorp New Zealand’s Executive General Manager of Customer Marketplace, which includes the Vero brand, said that while insurance is commonly seen as a grudge purchase, the risks of not being insured could be crippling for a business.
The survey reveals 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.
Mr Mitchell said, “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.”
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.”
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 Mr Mitchell.
The online national survey was conducted by BrandMatters in November 2017. A total of 901 respondents who met survey criteria were surveyed about insurance for the SME Insurance Index. 2,504 respondents began the survey, and 623 who did not have business insurance were asked follow-up queries.