The world of business is one of uncertainty and risks. In particular, today’s business environment has become very much more competitive and globally connected, necessitating changes in the way businesses are run.
For small and medium size enterprises (SMEs), the challenges in the business world pose a very real risk in their day-to-day running, especially without the resources and networks that bigger multinational companies have access to.
Therefore, it is imperative that these businesses take measures to protect their interests. However, the idea of protection has been rather slow on the uptake. In 2018, only one in 113 businesses in Malaysia took up protection against loss of profits.
The Insurance Services Malaysia Berhad (ISM) report on fire insurance for 2018 revealed that 829,466 fire (material damage) policies and 7,319 policies for consequential loss (loss of profits) were issued.
Beside challenges in terms of raising capital to innovate towards Industry 4.0 and pressures to seize growth opportunities, SMEs also face an ever-changing risk landscape in which supply chain disruption, damage or disasters are a major concern.
Yet somehow, this has not translated into more prudent risk management practices. Insurance penetration amongst SMEs is still very low with the majority being either underinsured or not at all.
The question here is: When will the penny drop? When will due importance be given protection for businesses? SMEs in Malaysia make up close to 98.5% of the business establishments in the country and contributed 38.3% in GDP or US$126.3bil (RM521.7bil) last year.
On an interesting note, the Entrepreneur Development Ministry has set a target for SMEs to deliver 41% to the national GDP by 2020 under the Dasar Keusahawanan Nasional 2030 (DKN 2030).
In view of this, SMEs must look towards insurance – not only as a means of protection but also essential towards ensuring their longevity. A fire insurance policy usually covers a property against losses or damages caused by fire or lightning, and explosion resulting from domestic gas.
Allianz General Insurance Company (Malaysia) Berhad (Allianz General)’s fire insurance can be extended by, paying additional premium, to cover the following risks – aircraft damage, earthquake and volcanic eruption, storm, tempest, flood, explosion, impact damage, bursting or overflowing of water tanks apparatus or pipes, bush/lalang, subsidence and landslip, spontaneous combustion, riot strike and malicious damage and damage by falling trees or branches and object.
Meanwhile, Inconvenience Relief Benefit (IRB), underwritten by Allianz General is a simplified version of the Fire Consequential Loss insurance curated to complement the fire insurance and suit the needs of SMEs.
SMEs can claim for IRB when:
• There is a loss of more than 15% of the building’s sum insured or
• Losses that prevent access to the premise in excess of 72 hours after the loss.
More importantly, Allianz General also has a provision offering a minimum payment of RM2,500 even if the insured’s loss does not meet the conditions above.
The policy also makes it easy for SMEs to make an insurance claim, as it does not require documentation on company statement. This is unlike Fire Consequential Loss insurance.
It also applies simple calculation on premium based on insured selected plan and employs a quick and straightforward claim process, as claims will be paid based on the sum insured.
IRB is perfect for SMEs as it covers:
• Micro firms: sales turnover of less than RM300,000 or employees of less than five.
• Small firms: manufacturers with sales turnover between RM300,000 and less than RM15mil or employees from five to less than 75/ Service and other sectors with Sales turnover from RM300,000 to less than RM3mil or employees from 5 to less than 30.
• Medium firms: manufacturers with sales turnover from RM15mil to not exceeding RM50mil or employees from 75 to not exceeding 200/ Service and other sectors with ales turnover from RM3mil to not exceeding RM20mil or employees from 30 to not exceeding 75.
Allianz General Insurance Company (Malaysia) Berhad Commercial Business head John Yep said SMEs must look at the bigger picture when it comes to insuring their business:
“The reality is that SMEs do not have adequate coverage. A majority opt for fire insurance but forgo protecting possible financial loss and investments. It is understandable small or medium sized businesses would not have an abundant amount of financial reserves. So, it begs the questions, is insurance a luxury or a necessity?”
“Essentially, Allianz General’s Inconvenience Relief Benefit provides SMEs immediate relief in the event of fire and other covered perils. Our aim as insurers it to provide a safety net so SMEs can continue to operate as usual and bounce back from such calamities. Besides that, the flexible benefits allow more room for adequate coverage for your business, ” added Yep.
Benefits Of Inconvenience Relief Benefit
With the Inconvenience Relief Benefit, SMEs are offered insurance protection for the income they would have earned if the business were operating as usual, during the duration of repair work.
Instead of a one-size-fits-all policy, the IRB offers flexible benefits to suit different needs. IRB benefits range from benefits paid per day for duration of repair work between RM500 for 30 days (minimum) to RM2,000 for 180 days (maximum).
For a full scale of the benefits offered by Inconvenience Relief Benefit, refer to the table below:
For more information, contact an authorised Allianz General agent or get in touch via the Allianz Contact Center at 1-300-225542 or email email@example.com.