Natural disasters rank well down the list of concerns
highlighted by Kiwi SMEs, according to Vero’s
most recent SME Insurance Index.
The Index, which
surveyed 900 Small and Medium Sized Enterprise owners (SMEs)
found that natural disaster ranks 15th on the list of
business risks, with respondents more concerned about cost
increases (33%), economic downturn (30%), workplace
accidents (18%) and political instability (18%) among other
risks.
Chris Brophy, Executive Manager Business
Insurance at Vero, says one reason natural disasters might
be less of a concern than other risks is that SMEs are
confident they are insured against them.
“Given New
Zealand’s experience over the past 10 years, it would be
surprising if SMEs believed natural disaster damage wasn’t
a possibility for them,” says Brophy. “But only 16% are
concerned or very concerned about the potential impact of a
disaster on their business.
“Natural disaster is one
major risk that SMEs can mitigate with insurance cover and
this research shows insurance is really doing its job of
delivering peace of mind to SME owners.”
The survey
reveals 47% of SMEs are confident their business is covered
for natural disaster. SMEs who’ve insured through a broker
and feel satisfied with the support and advice they’re
getting are even more likely to be confident (67%), compared
to 39% for those who bought all of their insurance
directly.
“The research suggests SMEs are gaining
confidence from working with their broker, which is likely
because they’ve had more in-depth conversations about
their risk profile and their cover, and may have a better
understanding of what their insurance will do for them if
they’re affected by a natural disaster.”
Of those
who are confident about their natural disaster cover, 84%
say their broker has provided a risk assessment and
recommended the most appropriate insurance, and 60% say
their broker has recommended other changes they could make
to minimise their risk.
The research also shows SMEs
in the Wairarapa/Wellington region are the least worried
about natural disaster risk, with 12% concerned compared
with the survey average of 16%.
Brophy says this
finding is surprising given the potentially higher risk of
earthquake and other disasters in this region.
“This
may be as a result of education and preparedness. Our
results show those in Canterbury are most likely to feel
confident about their natural disaster cover (68%), with 42%
of Wellingtonians surveyed feeling
confident.
“Aucklanders are the least
confident, with only a third confident they are adequately
insured against natural disaster risk. Perhaps the lower
risk of certain disasters in that region means they are less
likely to have engaged with their insurance cover and are
more likely to be unsure of how well they’re
covered.”
Similarly, industries that
might be hardest hit by a natural disaster are most
concerned about it, including accommodation and food
services (39%) and agriculture and farming (32%). However,
those industries are also the most confident that they are
covered (62% and 66% confident respectively).
Vero’s
customer data shows 97% of SMEs on its books have natural
disaster cover as part of their policy. Brophy says there
are a variety of reasons the remaining 3% might not have
cover, for example natural disaster not being relevant to
what they have insured.
Vero has recently added
information on ways SMEs can minimise property damage caused
by a natural disaster to its Risk Profiler tool, which
provides industry-specific data on risks and how to reduce
them.
“We’re here to pay claims if the worst
happens, but keeping businesses going and keeping people
safe is the top priority. Our Risk Profiler tool has
information to support brokers and SMEs to reduce or
mitigate risks to their
business.”
