GIB said comprehensive global cover should ideally cover a wide range of risks and potential liabilities to provide robust protection for individuals, businesses, and organisations operating internationally.
GIB Insurance has warned that multinational corporations may not be playing it safe enough when it comes to insuring against international risks, in spite of an increase in crises such as natural disasters, wars, and conflicts.
Recently, more than 3 000 structures in Western Cape, including wine farms and countless small businesses that form the backbone of local communities, were ravaged by a catastrophic storm.
Storm damages were experienced in the Paarl, Strand, Wellington, Somerset West, Muizenberg, Gordons Bay, Vredehoek, Three Anchor Bay area, leaving hundreds of insurance claims in its wake.
GIB divisional executive of corporate internal broking Mark Sanders yesterday said many businesses realised too late that forgoing global cover could have many unforeseen drawbacks.
“Global disasters often strike without warning, leaving businesses that have assumed they have the right cover vulnerable to loss and other business disruptions,” Sanders said.
Sanders said that inadequate insurance policies were often to blame for these vulnerabilities, but non-compliance with local insurance regulations are also a common factor.
He added that this can result in major penalties, fines, sanctions, or legal actions imposed by regulatory authorities in the jurisdictions where the company operated.
“It’s also necessary to regularly review and update insurance programmes to ensure a business’s cover aligns as much as possible with the changing regulatory landscapes,” he said.
GIB said comprehensive global cover should ideally cover a wide range of risks and potential liabilities to provide robust protection for individuals, businesses, and organisations operating internationally.
It said that food and beverage companies, for instance, would benefit from product liability insurance in the event of food contamination or outbreaks of foodborne illnesses such as salmonella or listeriosis.
The same goes for a certain pharmaceutical brand that faced severe backlash following claims that the use of its product caused ovarian cancer and mesothelioma due to asbestos contamination, it said.
Sanders said there were countless other areas that a sound global insurance policy would need to cover in order to mitigate the risk factors inherent in doing business on a global scale.
He said that having standalone master policies that catered for each insurance line risk on a global scale, instead of a series of misaligned insurance policies and programmes, ensured that all these risks were insured on one base policy wording.
“This should be strategically structured to address potential risks that have been identified in each of the territories worldwide, for each line of insurance,” he said.
Meanwhile, Indwe Risk Services CEO Peter Olyott, said in the dynamic world of business, unexpected events could strike at any moment, threatening the stability of even the most well-established enterprises.
Olyott added that despite its critical importance, many businesses found themselves entangled in common missteps when procuring and managing their insurance coverage.
“From property damage caused by natural disasters to lawsuits from disgruntled customers, the need for comprehensive business insurance cannot be overstated,” he said.
“One of the most prevalent mistakes is underestimating the scope of necessary coverage. Businesses often believe that a basic policy suffices to address all potential risks, leaving them vulnerable to crippling losses when adversity strikes.”
BUSINESS REPORT