INSURANCE: Uninsured SME's Risk Closure
Recent Western Cape Business News
Official crime statistics from the police service that showed cases of business robberies have soared by more than 40% over the last year highlight the risk that small business owners are taking by failing to have adequate insurance cover in place.
Police figures for the 2008/09 financial year revealed that business robberies rose a staggering 41.5% over the last year. Small and informal businesses were the worst affected, accounting for almost 70% of the total number of cases.
“Given the current economic climate it is understandable that many small businesses feel that they are strapped for cash. However, in light of the alarmingly high rate of business robberies, particularly against small companies, it is crucial that business owners ensure that they are adequately covered,” says JonJon Smit at CIB Insurance Solutions (CIB).
A study released in July last year by small business research company, SBP, found that half of all South African small businesses surveyed did not have any insurance cover in the event of a crime, citing that they did not have enough money to insure their business.
Most of the uninsured respondents also replied that in the event of a serious crime incident, they would be forced to rely on loans or credit cards or money from family to keep going. 20% said they would probably have no choice but to close down.
“The suggestion that one in five small businesses could face closure in the event of a serious crime is very worrying, particularly as police figures indicate that this is becoming increasingly likely,” says Smit.
Backing up the recent crime figures are results of a new study conducted by SME Survey, which found that crime has also once again become the key concern for small businesses – after briefly being usurped by electricity, interest rates and petrol prices last year.
With around two million small businesses in South Africa, employing just over half of the country's total labour force, the SME market is crucial to the continuing growth of the South African economy, particularly in the current economic environment.
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