JEREMY MAGGS: Small businesses are already under pressure from weak growth, from high costs and fragile consumer demand. But one shock can be enough to push a business right over the edge.
Old Mutual Insure is warning that many SMEs are still treating insurance as a grudge purchase rather than a resilience tool, leaving vehicles, equipment, stock, premises and income streams exposed.
The risk is not just about being uninsured; it’s about being underinsured and only discovering the gap when it’s far too late.
I want to discuss this now with Schaun Van Den Berg, who is executive for alternative channel solutions at Old Mutual Insure. Schaun, a very warm welcome to you.
So when you say that SMEs must protect – and I quote – ‘what built them’, what does that mean in plain business terms?
SCHAUN VAN DEN BERG: For many SME owners, their business is one of the biggest investments they’ve ever made. It’s years of hard work, long hours, personal sacrifice and often their family’s lives.
Now, protecting ‘what built you’ means making sure that if the unexpected happens – whether it’s a fire, theft, storm damage, or equipment failure – your business can recover and keep operating.
It’s about protecting everything you have worked so hard for.
JEREMY MAGGS: And part of the problem, Schaun, I imagine, is that many small business owners would see insurance as a monthly cost, and not necessarily a survival tool – which you’ve explained to me is now absolutely critical.
SCHAUN VAN DEN BERG: 100%. So it’s easy to look at insurance as just another monthly expense. But the real value of insurance is what it enables you to do when something goes wrong.
Most small businesses don’t have a large cash reserve to replace equipment, rebuild the premises, or recover from a major loss.
Insurance provides that financial safety net, helping businesses stay operational, serve customers and protect jobs when they need it most.
JEREMY MAGGS: So, what do you think the single biggest mistake is that small businesses make when insuring their businesses?
SCHAUN VAN DEN BERG: I think the biggest mistake is not looking at your business as an asset, or looking at the risk if something were to happen or if something were to be lost, or if an incident could happen.
The message is simple. You don’t want to find out you’re not properly protected when something happens.
You have to review your business as it grows over time. You have to look at every single piece of equipment, every member of personnel and the premises you have. If that thing is not there, how would your business continue?
JEREMY MAGGS: Schaun, I think the key phrase that you’ve just used there is ‘not properly protected’. How dangerous is underinsurance, particularly as we are well aware that replacement costs keep rising?
SCHAUN VAN DEN BERG: 100%. So that’s the fundamental thing about insurance. Businesses change over time. You buy new equipment, you take on more stock, you expand your operations – and your insurance is not reviewed. You need to keep your insurance [relevant] at the same pace as your growth.
Take the time to review cover regularly. You’ve invested years building your business. Now make sure you’ve invested enough to protect it.
So annually review your business. Look at what you’ve covered. If your stock levels have doubled and something happens, we will cover only a portion of whatever you lost, and your business can’t continue.
JEREMY MAGGS: You talk about ‘same pace’. I understand that, and I am understanding that. But also, I guess, Schaun, it’s about understanding the basic components of the policy itself.
I wonder, as you outline this to me, whether the business owners do actually understand what they are covered for, and perhaps more importantly, what they’re not covered for.
SCHAUN VAN DEN BERG: 100%. And that’s where you need someone to assist you. Most businesses have an accountant to review their financial statements and financial status. You have an attorney or lawyer who looks after your legal needs, but you don’t have a professional who looks after your insurance needs or the risks your business faces.
You need to consult with a broker who can sit down with you, do a proper risk assessment, look at where the gaps are, review [your] portfolio and just give you adequate cover for whatever your business needs at that moment.
And then, as I mentioned, review it periodically just to make sure you’re covered in case of something coming up.
JEREMY MAGGS: You use words like ‘explanation’ and ‘gaps’ and ‘risk assessment’, and that is so critical. But Schaun, often I wonder if the insurance industry itself does enough to explain risk in language that small business owners actually understand.
SCHAUN VAN DEN BERG: Yes, 100%. Again, I would say get a proper broker; get someone to sit with you and explain the details of a policy. When you get to the claim stage, that’s not when you want to learn how your policy works and how your insurance will perform. A broker will set that out for you.
The broker will explain to you, in the event of X happening, what the likelihood is of an indemnification paying out at a claim stage, and then what you are entitled to at that point in time.
JEREMY MAGGS: Schaun, in a weak economy, though, it’s very hard sometimes, I would suggest asking SMEs to spend more on cover when we agree, so many are fighting for cash flows. It’s a difficult internal conversation to have, isn’t it?
SCHAUN VAN DEN BERG: 100%. That’s why risk assessment is so important. You do not need to insure everything in your business.
You need to ensure what’s critical to your business continuity. The things, the assets, the machines, the personnel – things that are critical for the business’s continuity.
If something happens and that item is gone, broken or lost, and your business cannot continue tomorrow, what is the revenue loss that you will experience during that period? That’s where insurance comes in.
It gets you back on your feet as quickly as possible so you can continue with your business.
JEREMY MAGGS: And that is so important. You talk about the ‘critical list’. So, is there an ideal way of reviewing? Do you first look at asset value, business interruption cover, stock vehicles, or liability exposure? Is it difficult to rank those? I guess it all depends on the nature of the business.
SCHAUN VAN DEN BERG: It does. It differs from one business to the next, depending on size and also on geographical area.
We experienced the floods in the Western Cape recently. There’s a big fire exposure in Gauteng due to the density of the infrastructure. So, depending on your location and the size, someone will do a proper risk analysis. ‘This is your biggest exposure.
This is where I think you need to take some cover, so that we can transfer the risk to the insurance company. In the event that something happens, we can take care of you and put your business back into operational ability.’
JEREMY MAGGS: So Schaun, in conclusion then, what is your blunt message to a small business owner who might say, ‘Listen, I’ll take my chances because I can’t afford more insurance’. What do you say to them?
SCHAUN VAN DEN BERG: ‘At the end of the day, protecting what built you isn’t about insuring assets. It’s about protecting your ability to continue trading, supporting your employees, serving your customers and securing the future of your business.’
JEREMY MAGGS: Thank you very much indeed, Schaun Van Den Berg, executive, Alternative Channel Solutions at Old Mutual Insure.
An important conversation and some very good advice. Thanks for joining us.
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