SMEs still not clear on insurance, says Suncorp study
27 July 2012

Many SMEs remain underinsured and don’t understand what cover they need, says a new Suncorp white paper…

It says the industry should play a role in educating smaller businesses on the need for adequate levels of cover.

The SME Association of Australia says SMEs represent more than 99.7% of actively trading businesses and employ 70% of the Australian workforce.

Suncorp says they are particularly vulnerable to business interruption since they operate on thinner margins and are more likely to suffer from cashflow issues if a catastrophe occurs.

EGM Claims, Commercial Insurance Matt Pearson says in the white paper that many businesses remain underinsured and are reluctant to maintain the level of cover they need.

“While businesses accept the increase in such costs as purchasing new equipment, they often baulk at ensuring they have the insurance to cover those increases.”

Mr Pearson says businesses’ understanding of what cover they need is limited.

“There is a crucial role for the insurance industry to educate businesses about the necessity of proper insurance cover.

“The industry needs to work collectively to demonstrate the value of insurance to business.”

The white paper also points out that while recent natural disasters have put “incredible strain” on the industry, some of the effects have been positive. For example, insurers have devised new levels of response in dealing with each disaster. There is also significantly more community awareness around the value of insurance.

The report also says there is still a need for governments and local bodies to be more active in minimising the effects of disasters.

“Otherwise insurers will either become more reluctant to insure various areas or be forced to increase premiums to cover the repeated costs they have to pay out on risk areas being hit time and time again by events.”

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