With armed robberies rising 41% last year and the country still struggling to emerge from the recession, many business owners are faced with the dilemma of cutting costs on the one hand,while continuing to insure their business against crime on the other. Doing away with insurance is not such a good idea, especially when 70% of all armed robberies target small businesses, according to the police.
Business Against Crime and the police are piloting two interventions – one in Tembisa, the other in central Johannesburg. They are quizzing business owners about how they handle their cash and what security they have in place, the idea being to provide these businesses with security tips. But it’s not enough to rely solely on their help.
A study by small business research company SBP, released in July last year, found that half of all South African business owners surveyed don’t have insurance to cover a burglary or robbery.At the same time, stats provided by Indwe Risk Services reveal that the number of clients hit by armed robberies increased by nearly 100% from 2007 to 2008.
However, in recent months most of Indwe Risk Services’ clients have chosen to cut cover for things like cash, laptops and business interruption, according to the firm. But the advice from Indwe Risk Service’s Peter Olyott is that before you decide to cut your premiums, ask yourself which risk if it ever were to occur, could close your business down or ruin you financially.
Olyott advises business owners to insure against loss or damage to their own vehicles, theft of their assets and loss of money. He also recommends looking at practical ways of reducing insurance spend by reviewing the insured values on equipment, stock and vehicles.
Another way to cut costs is to shop around. Opting to go with a direct insurer is also an option, especially as they claim to offer more affordable cover. Traditional insurance firms,however, often argue that direct insurance companies offer boxed products which don’t cater to a business’s specific needs.
But Ernst Gouws, CE of Outsurance, says that direct insurers are more modern in their approach and so provide more flexible offerings than traditional brokerages. In his view it’s also not good enough to simply ask your broker to shop around for you, because broker commissions make up 15% of your premium.
Gouws says one way of cutting the cost of your premiums is to consider which risks you are willing to take. His suggestion is to take out insurance on items such as your company vehicles and trucks, as well as items like laptops, tools and equipment that are most likely to be stolen in the event of a robbery or burglary. He recommends lower premiums and a high excess on office contents or non-moveable fixtures.
“This way you self-insure these goods against the unlikely event of them being stolen, but you still have proper insurance for worst-case scenarios such as your whole office or factory burning down”.
Jon Jon Smit, sales director for CIB Insurance, recommends some simple steps to reducing your premiums. These include ensuring your fire-fighting equipment is serviced, making sure your housekeeping is neat and tidy, taking the necessary security precautions like having two people present at opening and closing times, doing regular stock takes to ensure stock levels are accurate and switching off high-voltage electronic equipment after hours to avoid electrical fires.