The rise of the internet and continued evolution of eCommerce has seen a growing number of South African business owners clicking online to solve their insurance needs.
However, obtaining the appropriate type of business insurance policy is more complex than personal insurance and business owners are urged to educate themselves on the terms and conditions of policies before purchasing online, in order to ensure that they are covered for all risks.
This is according to John Kerby, Corporate Accounts Director at Risk Benefit Solutions (RBS), an independent insurance and risk specialist company, who says, “As South Africans become more accustomed to transacting online, coupled with an increase in brand awareness by direct insurers across multiple digital channels, we are noting a marked increase in SME owners purchasing business insurance online.
He points to a recent survey by Deloitte of small-business owners which found that about one-in-five would very likely buy insurance direct from carriers online if given the opportunity, while another third would be somewhat likely to take the plunge.
Kerby explains that online insurance purchases for businesses are best made by small businesses with ordinary business models and no unusual risks. “There are many products currently available in the insurance market, varying in policy wording, and many are often tailored to suit a specific type of industry. Business owners need to be particularly selective and ensure that they are purchasing the correct limit and type of cover, and at a competitive premium.”
Kerby advises that owners of large commercial operations, in particular, seek the guidance of a professional broker who is able to provide a comparative and educated quote based on the specific needs of a business.
“A broker also has access to multiple insurers and their products and is well versed in the comparative differences, therefore being able to guide business owners and structure the correct cover to suit a business’ needs. “Going online or a call centre is often one dimensional and can only offer one product. In comparison, a broker will conduct a needs analysis, and has to exercise due care when establishing and explaining the correct values and sums insured, as well as making sure the business owner is acutely aware of what is insured, thereby not exposing the business to unnecessary risk.
“Compared to online, a broker will also be responsible for reviewing a business’s existing policy to ensure that the cover is exactly in line with what the business requires and that there are no gaps in cover and no unnecessary wasted premiums for cover not required.”
Kerby says that there is often a misperception that direct is cheaper and will save you on monthly premiums, but it can in fact be more costly, mainly due to the competitive environment that brokers operate in locally, which continually drives down premiums. “There is also a misperception that cutting out the middleman will allow a client to save on broker fees but clients should not be fooled by this as commissions are already built into an insurance quote.”
He adds that policy wording can be another downfall for businesses when purchasing insurance online as no two policy wordings are the same. “Online insurance cover usually has limited cover or restricted wording, whereas brokers will usually negotiate wider cover for their clients to ensure the client isn’t underinsured.”
Lastly, Kerby says that a broker will also provide guidance through the process of claiming from insurance, and will assist in the formulation of the claim. “Should a claim be complicated or rejected by the insurer, for example, the broker is on the client’s side, and is able to establish if the repudiation is fair and legitimate. If not, a broker will present an argument on the client’s behalf, and will often challenge and obtain legal opinions on behalf of clients.”
He advises that businesses need to proceed with caution when purchasing online insurance, as the more complex the structure of cover needed for a business, the less likely they will be covered correctly. “It is recommended that only very simple, small businesses attempt to place their commercial insurance online or via a call centre, and that more complicated businesses rather seek expert advice due to the complexities involved,” concludes Kerby.