The New Zealand Herald

One-quarter of small firms not insured

Cover vital with our high risk of natural disasters, says ICNZ

- Aimee Shaw

One in four small and medium-sized firms do not have insurance cover for their businesses, putting assets and employees at risk. Research released by Vero Insurance this week shows the cost and the perceived lack of benefits to be the main reasons.

This is particular­ly pertinent as the nation picks up the pieces after the fourth storm of the year.

All the major insurance companies reported a rise in claims yesterday, with AA Insurance receiving a week’s worth of calls in a day.

Suncorp New Zealand customer marketplac­e general manager Campbell Mitchell said insurance was commonly seen as a “grudge purchase”, but the risk of not being insured could be crippling for small firms.

Research findings, based on a survey of more than 900 small and medium-sized firms, found 23 per cent had no recovery plan in place if something was to happen.

“One of the concerning findings from this part of the research is many SMEs with no insurance simply aren’t sure what they would do if something went wrong,” Mitchell said.

“Thirty-one per cent of the SMEs we spoke to thought their business might shut down if a major negative incident occurred.

“Previous disasters have shown larger events can have a disproport­ionately severe impact on small businesses, which in turn can affect local economies.”

Fifteen per cent of SMEs said they would self-insure if something was to happen and 3 per cent would get a bank loan. Of the business owners who do have business insurance, 38 per cent said they were concerned about the risk of not being able to trade for an extended period, and 26 per cent were concerned about a key employee taking time off.

Insurance Council of New Zealand (ICNZ) chief executive Tim Grafton said it was essential for small businesses to be insured.

“We’ve gone through a couple of very significan­t earthquake events over the past seven years which just shows how vulnerable the country is to catastroph­ic natural disasters,” he said.

“If you look at what happened in Christchur­ch, more than 1200 businesses in the CBD were red-zoned off for the best part of two years and much of the CBD demolished so if you were a business owner operating there without insurance you would have been in a very powerless position.”

Over $1 billion of insurance cover was injected into the Christchur­ch business community during that time, Grafton said.

“Cashflow is on a month-to-month basis for many small businesses and they can’t afford to survive for long without it, so the benefits of insurance are to provide cashflow in so you can keep people employed.”

 ?? Picture / TJ Joubert ?? A tree in Western Springs Park shows the impact of Tuesday’s storm.
Picture / TJ Joubert A tree in Western Springs Park shows the impact of Tuesday’s storm.

Newspapers in English

Newspapers from New Zealand