SMEs caught unaware on business expenses protection

Crowe Horwath and Zurich Financial Services Australia partner to address SME underinsurance

A new strategic partnership announced yesterday between leading national accounting and financial services firm, Crowe Horwath, and Zurich Financial Services Australia (Zurich) will seek to reduce the high proportion of small businesses without adequate levels of business expenses insurance.

The partnership is designed to improve awareness among the SME sector that business expenses insurance is equally as important as other types of insurance.

Under the arrangement, small business clients will be advised on appropriate risk management strategies, including business expenses insurance, which will allow business operations to continue in the event of temporary injury or illness.

Crowe Horwath Head of Insurance, Maurice Thaung, said many SMEs have not considered the material impact that sickness and injury could have on their business with the Zurich partnership focused on drawing attention to the importance of business expenses insurance.

“We advise more than 200,000 SME clients and while most acknowledge the need for income protection, insuring fixed business expenses specifically is often overlooked.

“Without proper risk management strategies in place, many of these businesses would be forced to cease operating if the business owner were to suddenly fall ill or injure themselves for a prolonged period,” he said.

With the end of the 2013/14 financial year approaching, business expenses insurance is increasingly forming part of client discussions and cited as a key business risk needing to be addressed.

“In the lead up to 30 June, our financial advisers will work with our accountants to provide advice to clients on the most appropriate business continuity and protection strategies. Planning is an important part of any business and business expense cover could be the difference between a business being forced to close or remain running while the owner recovers. The partnership with Zurich will help us put the right strategies in place for our clients,” he said.

According to Zurich’s Head of Sales Strategies and Research – Life Risk, Andy Marshall, Australia already has a huge underinsurance problem and business owners are failing to understand the difference between other types of insurance and business expenses insurance.

“Many people believe that workers compensation, business interruption insurance, or even an income protection policy will cover fixed business expenses if they are unable to work due to sickness or injury. Personal income replacement cover is designed to cover up to 75 per cent of an individual’s taxable income from their business. If they have fixed business expenses and no business expenses cover, then they only have half the protection needed,” he said.

Research shows only 3.3 per cent [1] of new annual premiums are for business expenses cover with 92 per cent [2] of small business owners without expense cover. Business expenses insurance is used to cover fixed business expenses if you are unable to work due to sickness or injury.

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[1] Source: Plan for Life 2010