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Why Your SME Needs Business Insurance

While cash flow and capital is almost a universal problem for small businesses, it never hurts to be protected from unpredictable situations for an SME, which is most often closely tied to your livelihood. 

Is your SME sufficiently protected? 

Every Malaysian business insurance policy is as unique as the products and services the business provides. There’s no one-size-fits-all’ as Malaysian business insurance prices can vary greatly from business to business.

In this article we’ll cover a brief current history of insurance policies and core insurances that every business needs. We’ll also cover some examples of specialized insurances according to industry and business size. We also have a free Malaysian business insurance calculator you can use to get a quote customised to your business.

Business Insurance in Malaysia

Bank Negara’s initiative has now radically changed the business insurance landscape in Malaysia. Insurance companies are now encouraged to innovate their product offering to stay relevant and capture the growing market.

For the year ending 2016, the general Malaysian insurance industry recorded a gross written premium amount of RM17 billion, an increase of 1.1% compared to the previous year.The biggest contributor came from motor and fire insurance, which contributes almost 65% of total general insurance premiums in the market. In recent years, government regulations have made business insurance easier to obtain at a cheaper cost.

More products are being formulated to cater to each market needs which basically means a win for the consumers. Initiatives such as detariffication of business insurance premiums have led to price wars between insurance companies. Recent regulations by Bank Negara state that the insured are now free to choose their own insurance company. Businesses no longer have to be insured with their current financial institution.

Apart from that, many insurance companies have also opted to have their own direct distribution channel to target business owners. Companies such as AXA and Tokio Marine are actively pursuing a direct distribution channel as it will help lower the overall cost of insurance premiums to business owners

The domination of agents in the insurance industry especially the commercial insurance segment is prevalent. A majority of business insurance is covered by agents who have served the market for more than 20 years and have maintained an old-school approach to customer service.

Types of Business Insurance

Malaysian business insurance consists of different types of policies. The 2 main core policies are fire insurance & burglary insurance. Business fire insurance is essentially an insurance to protect your building and equipment from lightning and fire damage.

1. Fire Insurance

There are various types of fire insurance classified by their sum insured. A building with a sum insured of RM50 million and above is classified as self-rating, meaning the business requires its own fire rating based on the business’s level of risk exposure. Fire insurance for sums insured of below RM10 million cover Small Medium Enterprise (SMEs) and follows a guidebook set by PIAM (General Insurance Industry Board Malaysia).

2. Burglary Insurance

The second core business insurance policy is burglary insurance. Burglary insurance rates are an open book tariff that is decided by each insurance company. The rates are decided by various factors such as the presence of alarm systems, type of stocks stored and the type of business.

The majority of burglary policies issued for SMEs are considered generally reasonable in price. However, the coverage offered varies with perils added. The higher number of perils insured, the higher the premium. The main concern faced by business insurance policy owners are producing supporting documentation for claims to be paid according to claim payable scenarios.

The majority of business owners do not provide supporting documents for the claim as their record keeping is not updated. This provides uncertainty and causes insurance companies to reject their claim which happens more often than it should.

Buying Business Insurance That Suits Your Business

With the changing market landscape and digitalization of customer landscape, each business needs its own customized business insurance rates which are unique to its landscape. Some businesses in the retail industry need additional policies compared to their peers in the industry.

For example, franchisors of convenience store chains in Malaysia would need to insure their companies by taking up directors and officers liability insurance, considering they are listed companies and the sheer scale of their operations. However, small convenience stores do not need a this type of insurance due to their smaller scale of operations.

Also, if you have a sole proprietor business, workers compensation is not needed as there are only one to two employees. Typically, this applies to florist shops or micro businesses. However, due to a changing business landscape, any business regardless of if it’s a micro business or large enterprise would need a digital insurance policy to cover their e-commerce websites. With ransomware, data theft and hacks becoming more prevalent, each business needs to take precautions with their e-commerce website.

Customer Practice for Business Insurance

Customer practice according to the traditional insurance model is monotonous and has high levels of bureaucracy. The average time needed to process a policy is 3-5 working days from the date of confirmation of policy.
With the current practice, there is a lot of discrepancy in the presentation of the insurance quotation to the customer. Each agent has their own view point of how insurance should be written for their clients. This lack of consistency and too many options can be confusing or convoluted for SME owners

Calculate Your Business Insurance Needs with Senang’s Business Insurance Calculator

Senang insurance platform a customer-centric online product that aims to redesign the way SMEs purchase business insurance. Our software is based on getting the average premium for business insurance relevant and customized to each industry and SME.

Senang’s business insurance calculator provides a guideline to be more informed about industry rates and negotiate with insurance companies to get more reasonable and appropriate rates. Our platform aims to fill the gap between insurance companies and their distribution channel.

With the advent of technology, business owners now expect to deal with insurance online. The same way they use consumer-friendly online technologies to deal with banking, payroll, accounting or sales, online technologies offer a level of convenience which traditional agents unfortunately cannot offer.

Be sure to get your business’s customized quote today at
No fuss, no long waits.