The pandemic has substantially changed the relevance of business insurance. But, beyond specific needs according to the sector of activity, what are the essential insurances for small and medium-sized companies right now?
According to the Opinion Barometer published by the Spanish Confederation of Small and Medium-Sized Enterprises (Cepyme) last October, 50.5% of SMEs see their survival at risk due to the impact of the pandemic. What is more, 51% have poor expectations for the next 12 months, and 15% have very poor ones. Indeed, 52% say they have seen their revenues halved since the outbreak of the health crisis, and a fifth of them have lost up to 75% of their turnover. That is why a quarter of them have cut their workforce by up to 25%, and half of them predict that they will have to reduce their number of employees in the next 12 months. In fact, 43% of them have carried out a temporary layoff plan (ERTE) or will do so in the near future.
The crisis is affecting all sectors, with hotels, cafeterias and restaurants being the hardest hit, with a drop in sales of 76%. This is followed by transport and logistics (69%). Within the services sector, a large proportion of SMEs in hospitality and event management (72%), and arts and entertainment (65%), have reduced their revenues.
Insurance
First of all, the basis of the portfolio of any SME should include property damage andgeneral liability insurance . In addition, it should be completed with a specialized cybersecurity insurance, regardless of the sector in which it operates and provided it has a technological component to develop its activity, as well as a professional liability insurance specialized in its sector and a D&O insurance for managers, so that its employees are also protected "we have all had to make a great effort to get through this crisis and we know that SMEs have suffered a lot during these months and their situation is still delicate. Aware of this, different insurance companies have decided to improve the multi-risk business insurance, adapting the rates to help SMEs to protect themselves from the risks to which they may be exposed", they say, pointing out that their proposal for business insurance coverage would be, "in general, a complete offer of protection with the following insurance policies, always personalized according to the specific characteristics of the company:
Property damage insurance in its different modalities of nominated or unnamed risks(All Risks), which protect the company's assets and provide adequate protection against the impact derived from property damage.
Industrial or corporate liability insurance, in which the insurer assumes the payment of indemnities that may arise from claims made by a third party for liability incurred by the insured, or by persons for whom the insured is civilly liable.
Liability insurance for directors and senior managers, since the directors of any entity are constantly faced with difficult decisions and are subject to analysis by different interest groups: shareholders, partners, employees, customers, suppliers, the Administration, etc., and are personally liable with their own assets and unlimited liability.
Environmental Liability, since Law 26/2007 on Environmental Liability establishes a system of strict liability whereby reparation for damage to natural resources can be demanded (this insurance covers the consequences and management of a crisis derived from damage to the environment).
Transport insurance in its different modalities of land, sea, air or multimodal/combined transport, in Spain and abroad.
Legal protection, an insurance policy designed to protect, advise and defend the needs, rights and interests of the self-employed and companies within the scope of their business activity.
Breakdown of machinery and electronic equipment, the purpose of which is to insure machinery, installations or equipment located inside the premises or place where they perform their work. And it covers the direct material damage that they may suffer and that make their repair or replacement necessary, provided that they are due to a sudden, accidental or unforeseeable cause.
Cyber risk insurance, with coverage for damage to company data, civil liabilities arising from attacks or data misappropriation and the consequences of possible business interruption.
Cancellation insurance, which guarantees the payment of expenses and fixed costs paid by the insured that are not recoverable in the event that the company's trips cannot be held, have to be postponed, interrupted or suspended after their commencement," the expert explains.
"In addition to these insurance policies, it is also advisable to have risk prevention and management systems in place to minimize the probability and/or intensity of claims. Finally, it is very important to have information services on the credit quality of the company's customers and suppliers, as well as adequate technical resources for the management of unpaid invoices," they add.
News Source: Adn del Seguro 07/06/21