- Malaysian SMEs can maintain revenue in the event of unexpected shocks by obtaining business owners insurance and business risk insurance
- Insurance can increase the efficiency and profitability of the business by hedging against the risk of a contingent or uncertain loss
- Insuring a business’s workforce is a great way to attract the best talent – a key determinant of success in today’s competitive labour market
The global pandemic is a firm reminder that we live in a world of risk. Insuring against risk is as vital for companies as it is for drivers and homeowners. Bad things can happen not just to the business itself, but also to customers, employees, and others, and such adverse events can impact profitability in sudden and catastrophic ways. They can even be fatal for small and medium-sized enterprises (SMEs).
Although insurance is often seen as merely defensive, it can enable a business to prosper. A well-insured company can benefit from increased efficiency, a more capable workforce, and an enhanced reputation with customers, suppliers, and the wider public.
Insurance is even more important for SMEs than for large corporations
Small business owners may feel that they have enough control over their day-to-day operations to avoid problems that can occur in large companies – particularly those where the work is too vast for top management to oversee everything directly. However, every firm faces risks beyond its control, such as a fire that starts outside the premises, and a smaller firm risks being destroyed overnight by such an event1.
You can maintain income by purchasing Business Owners Insurance
When disaster hits, a shop or a small manufacturing operation may have to close for repairs and replenishment of inventory, incurring extra costs when there is no income. Purchasing Business Owners Insurance or business interruption insurance to cover such an eventuality guarantees ongoing income, which can keep the business afloat and facilitate recovery2. By purchasing life insurance, the owner of a small business can also guarantee their family can keep it running after they are gone.
Third-party liability is a risk all businesses need to insure against
Nobody would dream of driving a car in Malaysia without third-party liability insurance, not only because it’s mandated by law, but because they might otherwise face a bill for millions of ringgit after an accident. In the same way, all businesses, however small, need to have business liability insurance.
The need for this is obvious with food shops, for example, where the business deals directly with the public and the product can affect health. But all other businesses must be insured against accidental damage to the interests of both customers and people outside who may be affected by an action of the company. Firms that provide professional services of all kinds also need professional liability/indemnity insurance to protect themselves against negligence claims that may result from performance failures or mistakes3.
Insurance can increase efficiency and profitability
The owner or manager of an SME needs to focus efforts on getting more customers, improving the product, attracting talent, streamlining operations, and many other essential tasks. Insurance can lighten the load by shouldering much of the burden of risk management. Removing worries is a great motivator4. One certainty provided by insurance is legal compliance – some insurance obligations are compulsory in Malaysian law, while contracts may contain clauses specifying insurance policies.
SMEs that insure employees attract the best talent
There is a limit to how far an employer can attract the most talented and hardworking employees – they can only raise salaries so high, especially when large corporations are able to outbid them. Especially at a time when stable employment is becoming less certain, applicants may be more interested in the complete package, including fringe benefits and flexibility to extend coverage to dependents, than in just the headline wage rate.
Providing healthcare and workmen’s compensation insurance is a good way to attract and retain the best talent – and to make sure employees are fit for work. At the top level of a company, key person insurance is an important way to ensure continuity when a company leader or essential high-tech worker is indisposed5.
A one-stop insurance shop is ideal
UOB Malaysia can provide the above types of insurance to meet all your risk-management needs at its One Stop Solution Centre for Business Coverage. Here you can obtain a package of insurance policies tailored to your specific needs, including those of your particular economic sector6. Contact us today to find out more.