SMEs who fear crime should act on insurance
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While crime remains one of the biggest concerns for small businesses in
The SME Survey 2010 reported that 50% of respondents at established SMEs are concerned about the impact on their business. However, a study by the South African Presidency on the impact of crime on small businesses found that half of the South African small businesses surveyed had no insurance cover in place.
According to Barry Taylor, Chairman of the Short Term Exco and Director at the Financial Intermediaries Association of Southern Africa (FIA), insurance cover is important for any business but especially for smaller firms. “SMEs may have less capital to sustain themselves in the event of a crime, so it is vital that they have a proper risk management plan in place, and this includes having the appropriate insurance cover.”
“When small business owners think about how crime may affect their company, many only consider the impact of loss of money. However, there are a number of ways that a small enterprise can be affected, including the danger of injury to staff, which can result in trauma, as well as adversely affecting the productivity of the business.”
He says because SMEs may face specific threats unique to their businesses it is a good idea to speak to an intermediary about assessing the type of cover required. “There are a wide variety of covers available including fidelity cover for employee fraud/embezzlement, personal accident benefits for staff injuries/deaths and trauma counselling as well as office contents cover and business interruption cover.”
“Business interruption is a significant threat to many companies and can often result in a loss of profit. For example, certain stock may take a long time to replace whilst records that have been lost following the theft of a computer can also severely curtail a company’s operations.”
“In addition, there is also the increase in danger that staff may be involved in crimes against the business that they work for, especially in a tougher economic environment.”
He says that while having a good risk management plan and the correct insurance in place can prove vital in helping a business through the experience of having a crime perpetrated, it is also critical that owners take the responsibility themselves.
“By not following correctly the conditions laid out on a policy one can invalidate their insurance cover so it is hugely important to understand the insurance cover that one has and the conditions specified in the policy. For example, requirements such as testing alarms, making sure the alarm is set at night, and keeping money in a safe,” concludes
Source: Risk SA - www.risksa.co.za