SMEs need more insurance protection

More than 90 percent of business enterprises in Asia are small and medium enterprises (SMEs), mostly family-run businesses, small corporations, or single proprietorships.

In the Philippines, SMEs – which comprise 99.6 percent of all registered companies, contribute 32 percent to the economy and employ 69.9 percent of the labor force – are even more indispensable to overall growth.

Unfortunately, risks to the survival and sustainability of these companies are often ignored by the SMEs themselves as well as most insurance companies.

Just like bigger ventures, SMEs need protection from risks ranging from computer crashes to burglaries to fires, observes Ian Kohler, director of enterprise of Aon Asia. Aon is the world’s second largest insurance broker with 600 offices distributed throughout 120 countries.

Kohler noted that most small business owners across Asia do not have the time nor expertise to engage in risk management or setting up a system to minimize the loss exposures faced by an organization.

Recognized as a vital component of any risk management plan, insurance policies serve as safety nets for small enterprises when calamity strikes. Solutions, after all, are designed to facilitate their recovery from losses and resume their business.

Recently, Aon negotiated with a number of insurance companies to come up with a package that assists modest and medium-sized ventures in mitigating risks they commonly face. Kohler notes that by leveraging on the collective purchasing power of SMEs and Aon’s extensive distribution network, the insurance brokerage firm has been able to provide a necessary service within the economic reach of these progressive enterprises.

In November last year, Aon Philippines launched three insurance packages for small businesses that cover fire, electronic equipment, money securities and payroll, burglary, and comprehensive general liability risks.

The Office Care, Restaurant Care and Store Care packages are tailored to fit the specific insurance needs of these SME sectors, explains Gerald Dolina, assistant vice president of Aon Philippines. SMEs may opt to select several or all of the seven risks as well as take extra coverage to cover other areas. Aon aspires to be comprehensive while giving the client flexibility.

It takes experience and foresight to anticipate risks, points out Kohler.

He relates that one large US retailer requires its manufacturers in China to take out product liability insurance. The chain noted the litiguous nature of the American legal system and requires manufacturers to protect themselves against possible law suits.

In another case, comprehensive general liability insurance allowed an electronic manufacturer in Makati to recover immediately from an accident caused by a burst pipe in its unit. The water seeped to a neighboring office damaging computers and cabinets. Nevertheless, the client’s insurance covered for the damage.