Many small and medium-sized enterprises remain underinsured, increasing their exposure to financial risks.
A recent study by QBE Singapore indicates that numerous small and medium-sized enterprises (SMEs) are significantly underinsured. This issue is particularly concerning, given that a notable percentage of these businesses have reported experiencing various risks. While the number of SMEs facing at least one business challenge has decreased from 88% to 72% in 2024, many still encounter substantial risks, such as data breaches (24%) and income loss due to business interruptions (19%). Alarmingly, 9% of these businesses lack insurance coverage to safeguard against these events.
The reasons behind this underinsurance include a lack of awareness, limited time to focus on insurance matters, and concerns over costs. During a recent roundtable discussion, industry experts highlighted the challenges faced by SME owners, who often juggle multiple responsibilities, from managing daily operations to ensuring customer satisfaction. Jack Ho, owner of The Flying Squirrel restaurant, emphasized that insurance typically becomes a consideration only during policy renewal periods, as business owners prioritize operational concerns over risk management.
To address these challenges, QBE Singapore is taking proactive steps to educate SMEs on risk management. Goh Shun Quan, head of underwriting for QBE, noted that the company has developed risk management toolkits specifically designed for food and beverage startups. These resources help businesses identify potential risks and implement effective mitigation strategies.
In discussions regarding the insurance market, Lester Wee, an account manager at Brian Mae, pointed out the diverse priorities among potential clients. While some focus solely on cost, others seek comprehensive coverage tailored to their specific needs. He advised business owners to consider not only the price but also the quality of coverage and the after-sales support provided, particularly in terms of claims assistance.
Ho highlighted the importance of having adequate insurance coverage, noting that restaurant owners have a duty to ensure the safety of their customers and employees. By investing in the right insurance, business owners can secure peace of mind, knowing that they are protected against unforeseen incidents.
Ultimately, the roundtable underscored that unforeseen events could severely impact SMEs’ operations and financial stability. Goh reiterated that insurance can provide essential cash flow to cover costs associated with property damage, replacement of raw materials, and other unforeseen expenses, thus helping SMEs to maintain their operations even in challenging times.