Times are tough. South Africa is in the grips of a global pandemic, with a deepening recession on the horizon. For business owners, the pressure is on to cut costs and streamline operations as much as possible. Often, this sees insurance being reduced. But to mitigate against the risk of not being adequately covered, decision-makers need to consider what they insure.
Realistically, not having insurance or being under-insured are not options when companies are trying to secure their business future. Just consider the significant costs if a disaster strikes and they are not protected. Simply cutting back to save money is not an effective long-term strategy.
Insurance revolves around the risk factor attached to valuable assets. In South Africa, crime has become a constant. Thieves are not going to stop stealing, accidents will continue to occur, and other mistakes will happen whether the country is in a recession or not.
Some might argue that with South Africa being labelled a high-risk country, insurance is one of the most fundamental things a company must-have. Whether it is business assets, property, vehicles, security cameras, or any other things of value, it is critically important to keep these insured.
We are way past the adage that insurance is a grudge purchase. Clients should have, and should constantly test, robust risk management programmes and risk mitigation strategies, which will go a long way to ensure reduced premiums.
Ultimately, insurance is a means to protect the policyholder from financial loss. Consider it a form of risk management. Just like companies have disaster recovery and business continuity solutions in place, so too must they have insurance to ensure continued operations in times of crisis, especially for catastrophic losses such as fire and storm damage.
Of course, insurance is about more than just providing cover against thefts and accidents. Some believe that the current environment is a result of significant mismanagement that has been exacerbated over several years. Irrespective of whether people agree with it or not, the volatile political climate in the country is cause for concern.
The continued impact of lockdown is seeing South Africans changing their driving habits. This creates a knock-on effect, negatively impacting car sales. In turn, it means less business for motor insurance companies. This doesn’t even take into account the impact on food prices, inflation, and so on.
This challenging environment does not mean businesses must close shop and wait out the storm. Instead, they can adopt different strategies when it comes to insurance. For example, a company might decide to drop cell phone insurance and replace it with liability cover.
Getting the right advice from a trusted broker is therefore crucial, to benefit from the subtleties in insurance policies, especially business-focused ones. This will ensure a company is covered for the right risks at the right times for the right amounts. So, instead of scaling back, business insurance can be optimised to deliver more effective value.
It is through this optimisation where insurance can deliver meaningful value to business owners, while they remain focused on delivering on their growth targets in the competitive environment.
By: Steyn McDowall, Executive Director: business and specialist insurances, Indwe Risk Services
About Indwe, Indwe Risk Services (Pty) Ltd is a leading personal, business and specialist risk and insurance advisory business.