SMEs passing over on insurance
The Insurance Council is creating tools to educate small businesses on the importance of the insurance cover to protect them in the event of a disaster.
The council, in partnership with the Young Enterprise Trust is targeting the sector
after a survey showed almost 30 per cent of business owners were uninsured.
BusinessNZ chief executive Phil O’Reilly said education was one of the key elements of making sure more small to medium businesses were properly insured.
‘‘Small business owners are less effective at running a proper risk framework. They don’t realise insurance is available or they have underestimated the risks associated with particular events like earthquakes,’’ he said.
However, education by itself was not enough. O’Reilly said it was also up to the insurance companies to properly assess the needs of small businesses and offer them the right coverage, keeping in mind small business owners may not have the funds for expensive insurance cover.
‘‘ Fit for purpose insurance at the right price is actually an important part to ensure we get business growth,’’ he said.
Founder of the New Zealand SME Business Network Tenby Powell said education was important to get the almost 460,000 small and medium businesses in New Zealand to change their insurance practices.
‘‘Anything that’s an additional cost and not legislated, they tend to avoid,’’ he said.
Powell runs a network that has more than 7000 SMEs and said there is immeasurable importance in small business owners being insured.
‘‘Small businesses account for 97 per cent of all New Zealand businesses. It contributes 28.6 per cent to GDP and employ 30 per cent of all employed people in NZ.
‘‘We know now net migration figures to New Zealand are bigger than they’ve ever been. We will see an increase in small businesses and increase of their contribution to the economy. It’s also a socio-economic contribution. This is providing people with a job, an income and the dignity that comes with being a contributing member of society.’’
For Christchurch restaurant owner Peter Foo, insurance was something he invested in but not enough to cover the extensive damage to his building in the 2011 earthquake.
Malaysia Delights Restaurant was originally located on Manchester St and closed for a year after it was red-stickered.
Foo’s insurance with Allianz covered business interruption and some contents but he had to use money from his own funds to pay bills, set up a new restaurant and continue paying for insurance.
Despite all this, Foo has chosen again to take the risk and keep the same insurance coverage with just an increase in the insurance premium.
‘‘If nothing happens, then you don’t need it. If something happens it’s important,’’ he said.
His new restaurant is up and running in Papanui, but it is operating at a loss and Foo still has unpaid bills to take care of.
But he said it was far less stressful than having to go through the claim process.
‘‘They ask many questions. They ask me for a dish, how many ingredients, how much time to cook. During that time it was so stressful.’’