Protecting your assets

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Good health is a high priority for most individuals and should also be a priority for an organisation.

Making sure your business is protected from unexpected circumstances is vital, as The Advisor delves deep into the world of insurance.

The burgeoning economy of the UAE has been a beacon for many small and medium business (SMBs) and entrepreneurs keen to set-up business and take advantage of the market opportunities.

However, as with most vibrant economies the ‘get-it-done-yesterday' philosophy is very prevalent and once caught up SMBs only focus on sales and business development and neglect to protect their assets: both fixed and human.

For the year 2008, the International Monetary Fund has issued an upbeat outlook for economic growth across the Middle East and central Asia, saying that the high price of oil is likely to insulate the region from the broader global economic downturn and keep money flowing into new industries and poorer economies.

Despite this outlook for the region, the insurance market in the Middle East is lagging behind other financial service sectors in the region. This is evident by the low penetration, under-capitalised supply and an underdeveloped regulatory framework.

While a healthy cash-flow and greater market share is important, so is business loss prevention. In common parlance business loss can be defined as loss of valuable fixed assets owned by a company as well as injury or loss to human assets.

With natural disasters and employee illness a relatively common occurrence SMBs can ill-afford the negative impact of business loss from stoppages and unnecessary downtime.

Key factors driving insurance sector growth

• The rising graph of traffic accidents and death rate have been the main drivers for the Middle East insurance industry.

• Bancassurance will emerge as a big opportunity in the region.

• Opportunities for the car insurance market will emerge as the number of new cars are expected to grow at appreciable rate.

• Takaful insurance (Islamic insurance), whose global market is expected to grow five-fold by 2015, is expected to emerge as a big opportunity.

• The SMB segment has been a key contributor to the growth numbers in the Middle East.

Recently conducted research reveals that most SMBs are under-insured. The areas that SMBs frequently overlook include lack of insurance for their working premises and cover for their motor fleets.

Most are under-insured with little or no protection for themselves against any loss of income that might occur as a result of a disaster striking such as a fire or theft of stock on a large scale.

In the Middle East there is still vast opportunities for existing insurance providers as well as new players and this trend is expected to grow at the compound rate of 18-20% in the near future.

Key factors attributed to this opportunity is the Middle East's highly untapped market, rising awareness level, health consciousness and initiatives taken by government of respective countries in the region.

Business Insurance

One of the common mistakes most SMBs and entrepreneurs make is to choose a policy that they can afford rather than what they need.

In the short-term it might seem that paying less for a policy is a smart business move but in the long-term it will backfire as the insurance policy might not offer adequate coverage.

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