UAE broker warns SMEs on insurance pitfalls
Dubai, September 25, 2012
A leading UAE insurance broker has warned the country's small and medium sized enterprises (SMEs) against the potential insurance pitfalls facing them as they become increasingly influential to the emirates' economic future.
According to the Ministry of Foreign Trade, more than 80 per cent of the UAE’s private sector comprises SMEs, with around 200,000 companies currently in operation. The UAE Ministry of Economy recently revealed that SMEs contributed 60 per cent of the national GDP in 2011.
“We need a powerful, competitive SME community across the UAE in order to maintain the country’s fantastic growth and continue to create desirable and sustainable jobs,” said Mahmoud Nodjoumi, CEO and founder of Nexus Group.
"Sometimes businesses in the region grow at an incredible rate and many aspects of company insurance are not fully understood until a problem arises. We must do everything we can to ensure that those contributing to the UAE’s economy are equipped to succeed in the present business climate and to develop in the future,” he noted.
Insurance specialists at Nexus believe that the most common problem faced by SME business owners is the sheer range of insurance that may be required by a business. “True success stems from knowledge,” added Nodjoumi.
“Those that do not have a full understanding of the insurance market can get caught out, so it is best to seek counsel from an independent financial advisor who can undertake a management exercise, which is usually free, and then offer advice based on a real understanding of the business,” he added.
Among the options open to SMEs is a policy developed specifically to address general insurance needs, said the official.
"This type of insurance can be cost effective and typically includes cover for property all risks (covers accidental loss or damage caused to business property and contents), loss of rent, stock in trade, business interruption (covers loss of business income caused by the perils covered under the property section), public liability, tenants liability, motor insurance, workers compensation, fidelity guarantee, electronic equipment, travel, petty cash, personal accident, goods in transit, machinery breakdown and deterioration of stock," he added.
The insurance cover can be tailored to suit specific needs, but most will require property or public liability or workmens compensation.
“An area that needs to be emphasised concerns cases where people under-declare the value of their assets,” warns Nodjoumi.
"Whilst this can reduce the insurance premium paid, it can badly affect the business should they have to make a claim, as they would not get fully indemnified for their loss," he explained.
"A better and more logical way to keep costs down is to ask for options based on a higher deductible, i.e. the first portion of the loss amount you have to bear in the event of a claim,” Nodjoumi added.-TradeArabia News Service