There are an estimated 260,000 small and medium-sized enterprises (SMEs) in Singapore and together they account for 72% of all employment and contribute more than S$200B to the economy (in 2018). SMEs are defined as companies with annual turnover of less than S$100M or employs less than 200 workers.
Running a business is not without risks. Therefore, it is important for SMEs to understand the various business insurance to better protect our assets, liabilities and employees from the risks associated with operating a business.
Now as we start the new 2020 year, it is a good time for us as business owners to review if we have our business risks adequately covered. Let’s take a look at some of the SME insurance available that can help us manage the risks.
In running a business, one of the last things we want is a lawsuit filed against us due to our negligence in business practices. Negligence implies not taking proper action in regard to a reasonably foreseeable event; it has nothing to do with our intention. Public Liability Insurance protects our business financially from any claims that arise in relation to damage or injuries sustained by third parties and/or their property during our usual business activities. Most businesses will find public liability insurance relevant to them, especially those businesses that carry significantly higher risks. If our business involves any of the following, we should consider Public Liability Insurance:
- Manufacturing or repairs works
- Working in areas not owned by our business
- Regular visitors to our work premises
- Direct interactions with our customers
Not having enough Professional Indemnity (PI) Insurance (which is also known as Professional Liability Insurance) can put our finances and even our business at risk, if we are running a business which involved providing advisory and consultancy services, eg. medical doctor, lawyer, financial adviser, business consultants etc.
This insurance protects a professional such as an accountant, solicitor, architect and engineer against his legal liability to pay damages to persons who have sustained financial loss arising from his own professional negligence or that of his employees in the conduct of the business. The insurance offers indemnity strictly on legal liability basis. The PI insurance also indemnifies him for defence cost and expenses incurred in respect of a claim.
It is highly recommended that SMEs should consider an all-risk property insurance policy which compensates the business in the event of losses or damages to our property (including goods-in-transit in Singapore) which arise due to perils which were not anticipated. Some of the coverages which are available under such insurance policy are business interruption due to burglary, fire, machinery breakdown, explosion etc.
Employees are one of the most important assets to our businesses. Over 70% of 3.5 million Singaporeans are working in SMEs. Taking care of our employee’ well-being benefits the business. If employees are happy and well, they’re more productive and so the business thrives. Under the Work Injury Compensation Act (WICA), it is mandatory to protect our employees against work accidents or illnesses for:
- All employees doing manual work, regardless of salary level
- All employees doing non-manual work, earning less than SGD1,600 a month (revised to SGD2,100 from 1st April 2020)
SMEs have the option to purchase Employees’ Benefits coverage for other employees or provide some of the following:
- Group Term Life Insurance: provides a lump sum benefit upon death; total & permanent disability; or upon diagnosis of a terminal illness.
- Group Critical Illness Insurance: provides a lump sum benefit upon diagnosis of any insured critical illnesses.
- Group Hospital & Surgical Insurance: reimburse eligible expenses incurred in the event employee is hospitalised.
- Group Personal Accident Insurance: provides a lump sum benefit upon death due to accident; total & permanent disability due to accident; or other losses due to accident as listed in the schedule of benefits.
- Group Disability Income Insurance: provides a fixed and regular benefit in the event an illness or accident suffered by an employee leaves him incapable of engaging in his own or any occupation.
- Group Out-Patient Insurance: provides reimbursement of outpatient expenses incurred in clinics.
- Group Dental Insurance: provides reimbursement of eligible dental expenses.
The above-mentioned 4 essential types of business insurance are important for us to consider if we are running a business. For more information, please approach your insurance broker for a discussion to provide your SME an adequate coverage against potential risks in business.
Need someone experienced in SME/Corporate insurance to assist you to find and decide on the insurance plan your need? Feel free to reach out to us at email@example.com