Old Mutual offices in Sandton, north of Johannesburg. Its emerging markets arm will return to South Africa this year.
JOHANNESBURG - The success and growth of small, medium and micro enterprises (SMMEs) is essential to the development of our economy.

The insurance industry has an important role to play in assisting SMMEs to effectively manage risk and resist the temptation to save money by buying less insurance cover than their actual risks suggest.

1. Value of advice to create trust. This is where the value of advice can be clearly demonstrated. Henry Ford said: “If we asked our customers what they needed, they would have said faster horses.”

Therefore, as risks become more complex and costs grow, we need to, as an industry, enable SMMEs to trust us to advise them where to place their hard-earned money to safeguard themselves against potentially devastating setbacks.

In every business, customers are unique and face their own challenges and risks. For a manufacturer, protecting valuable stock during storage or transportation will be essential. A motor fleet owner will need comprehensive cover for specialist vehicles to protect them against accidents, theft or liability.

Insurance brokers have the knowledge, experience and skills to guide SMMEs in identifying the risks their businesses face and choosing the correct insurance products to meet their specific requirements.

2. Changing environment means changing needs and solutions. Typically, insuring business assets is a must if a business relies on motor vehicles, owns a building, keeps inventory or valuable contents on its premises, or is reliant on electronic equipment in the operation of the business. Business owners, SMMEs even more so, work under high pressure and have fewer margins for error as things continue to change. The cost of repair or replacement could be a major setback and loss of profits can make it even more difficult to pay off loan instalments or other business commitments. Therefore, to continue to effectively support SMMEs to survive and thrive in today’s changing environment, the insurance industry needs to constantly research, enhance and develop the right insurance solutions.

Property damage cover, such as fire insurance, compensates SMMEs for buildings or stock, while business interruption cover allows them valuable time to recover without feeling the strain of lost profits after an unfortunate event. Comprehensive motor insurance can cover vehicle repair costs and provide replacement vehicles allowing businesses to continue to render a service after a loss or damage occurred.

In addition, lawsuits can be costly and time-consuming, with exorbitant legal fees and resulting court awards. Liability insurance protects SMMEs from these.

Other important insurance products provide security against financial losses, resulting from theft, fraud or dishonesty by the company’s employees.

3. Partnering for success. Any business failure or loss can have far reaching effects on the rest of the economy. Therefore, it is necessary for brokers to partner with insurers who understand the risks inherent in a particular SMME’s field of business - a winning partnership to build the economy by supporting the sustainability of our small businesses.

WP Pienaar is the head of Quality Underwriting at Old Mutual Insure.