Whether your business is a small operation or an international corporation, business insurance is absolutely crucial. Without having effective policies in place, everything you have built is open to risks beyond your control, which could mean losing your life’s work.

The Private sector has been identified as integral to the economic well-being of South Africans

Private businesses play an indispensable role in South Africa’s economic success.  Small to Medium Enterprises (SME’s) and private corporations are recognised as being vital for the country’s economy. Without their productivity the livelihoods of millions of South Africans are in peril.

South Africa’s Business Sector has a Reputation: It is Underinsured

It’s almost something of a tradition to see businesses in this country underinsured. When facing economic difficulties this is often worsened, since implementing cost-cutting measures during hard times is expected, and reducing monthly insurance premiums can seem like an ideal way to save on monthly expenses.

But this leaves the business very vulnerable to unforeseen factors and events that could have a detrimental impact on operations. Being uninsured or underinsured could even open the company to the risk of closure, should it face a crisis that leaves it irrevocably financially impeded.

Businesses cannot manage factors beyond their control…

The last two years have highlighted many events and factors that management of corporations or business owners cannot control.

The ongoing global Covid-19 concerns and the impact they have had on the bottom-line of even the largest companies has highlighted again how much we find ourselves at the mercy of circumstances largely beyond our control. The widespread unrest in South Africa, which led to looting and destruction of commercial, private and public property, left many businesses further compromised and even beyond recovery.

Without adequate insurance, many might even find it impossible to rebuild the businesses that the owners and employees rely on for a living. Even now, many uninsured and underinsured companies have been unable to reopen.

However, businesses can respond to adverse circumstances with prudence. There is something that is within the control of business owners.

Businesses can control the insurance they have in place to mitigate the risks they might face

Underinsurance would mean that in a situation where a million rands worth of necessary equipment is stolen or damaged, the business will only be paid out for the amount that its insurance covers. For example, if the company only insured the equipment for half a million rand (50% of the value), the company will have to pay the other half a million from its cash reserves. Many businesses would simply not be in the position to replace the equipment, which puts those companies at risk of needing to close their doors.

Many companies could consider upwards of R100 000 of computer equipment lost to a power surge a very possible scenario, given our current load-shedding challenges. If an SME was only covered for 60% of that, it would mean they would need to find R40 000 plus to get up and running again.

Having adequate insurance is something that a company can control. And making sure that it is in place is something to be expected from the management of any enterprise.

There are tailor-made policies available for every business and corporation, large or small, across all industries. At Morebo, we are there to help you find the perfect product for your company.

What are some standard business risks that policies often cover?

Property and Accident Cover

Property and accident cover is needed to cover damages to business property. If there was damage to the property from employees or other scenarios such as severe storms, this damage is insured. Repairs can be made using the policy.

The property covered is not only immovable property, but damage to movable business property, such as electronic equipment. Motor vehicle insurance is treated separately: We will discuss this next.

Accident cover is in place should there be any accidents involving employees on the business premises. This is very important as the business can be held liable in the event of injury.

Commercial motor vehicle insurance

Policies that cover business vehicles can range from a single school bus at a private school to a fleet of specialised commercial vehicles.

Typically, commercial vehicle coverage will mean cover for any damage which happens to the vehicle while being used for any business-related activities. This could include day-to-day commuting on behalf of the company, driving to work locations, or to the sites of clients. In these cases if there was an accident the unfortunate incident would be insured.

It will also cover damage to the vehicle that could happen on the premises, such as if it was scratched by a client or employee in the parking lot or scratched by a gate.

Protection against claims of liability

When something goes wrong and a business is legally obligated to make it right, liability insurance comes into play. If someone is injured on your business property and the company is found liable, it will need to either compensate or make restitution. This could be to an employee or a visitor.

Scenarios that have arisen in the twenty-first century could include third-party loss due to a cyber-attack. There are even policies that include social media liability, whereby social media defamation suits will be handled by the policy.

Crisis and reputation management provides for instances in which your business’s reputation is in jeopardy.

It is indispensable that you talk to a broker about which policies you take out, as not every business insurance policy necessarily includes all of the above. Discuss your needs with an expert in order to make sure you have the necessary cover for your particular needs.

A product to consider: Business interruption cover

This might not be part of a standard policy, but it is definitely a product to add to your portfolio.

This covers financial losses that can occur when business suffers an interruption by events and situations that are covered by the property accident cover. These include theft or damage to insured company vehicles, damage to electronic equipment, property damage or theft in general.

Morebo – your helping hand in getting the perfect insurance in place for your business

The insurance industry is complex, and business insurance is no exception. Corporations and SME’s often do not have the time or expertise to navigate the myriad of options available and would struggle to make sure that their insurance portfolio adequately meets all the needs that it must for the continued security of the company.

This is why working with a knowledgeable broker who understands your company’s specific needs is so vital. At Morebo, you will find such a broker, who will ensure that the particular risks that your enterprise is exposed to are adequately addressed. They will also be acutely aware of the risk climate at any given time, as well the continued dynamic developments that take place constantly, in order to ensure that your current insurance is always sufficient to mitigate the ongoing risks of running a business in South Africa.

Morebo is on top of all legislative changes that could impact on the necessary insurance policies and implements risk modelling for each of our commercial and SME clients individually, using scientific approaches to best address their unique needs.

This means that you will have the best products and combination of choices for your business, leading to time and money saving, while you can maximise your efforts in running your company for the best results. The correct business insurance products could mean the difference between needing to close the doors and continued success, and Morebo prides itself on being part of the lasting legacy of our commercial clients.

Bibliography/Further Reading:

https://www.fanews.co.za/article/short-term-insurance/15/general/1217/underinsurance-a-challenge-for-the-south-african-business-sector/10117

https://www.businesslive.co.za/bd/companies/2021-08-02-many-underinsured-small-businesses-are-still-not-open/

https://www.insurancejournal.com/news/international/2021/07/15/622803.htm

https://ioninsurance.com/blog/business-insurance/can-happen-company-doesnt-business-insurance/

Top 10 Reasons Why Your Business Needs Insurance

https://www.thehartford.com/contact-the-hartford

https://cleartax.in/g/terms/corporate-insurance

SME

https://www.engineeringnews.co.za/article/sme-sector-critical-to-growing-south-africas-economy-pityana-2019-04-11/rep_id:4136

https://www.news24.com/fin24/economy/recovery-plan-has-no-hope-without-help-from-private-sector-ramaphosa-says-20210903

https://www.nimblefins.co.uk/business-insurance/business-car-insurance

Other South African Insurers:

https://www.santam.co.za/blog/business-advice/underinsurance-is-a-challenge-for-the-south-african-business-sector/

Quick & Easy Online Business Insurance Quotes

https://www.discovery.co.za/corporate/business-101-what-insurance-small-businesses-need

https://www.chubb.com/za-en/businesses.html

https://www.discovery.co.za/portal/business/business-insurance-product-and-services

https://www.outsurance.co.za/business-insurance/liability-insurance/