Risks of Operating a Business Without Insurance
Singapore is globally known to be business-friendly. The World Bank has consistently in the past decade ranked Singapore the top country in the world in ease of doing business. Unfortunately, about 10% of SMEs in Singapore operate without business insurance.
The entrepreneurs have various reasons for neglecting to insure their business. For some, it is a question of not having sufficient funds left over to cover business insurance. However, some entrepreneurs do not appreciate the risks that their businesses are exposed to, so they choose not to pay the insurance premium. Unfortunately, the failure to invest in business insurance carries various risks (read more here).
Operating a business without insurance is against the law.
Four types of insurance policies are compulsory for businesses in Singapore. They are work injury compensation, public liability, property, and shipping insurance. Unfortunately, some businesses do not take any of the compulsory policies related to the business, while others take some policies and neglect others.
For example, some business owners opt to take property insurance and neglect to take coverage against work injury compensation. Such businesses risk closure should they be caught breaking the law.
Companies risk losing everything without business insurance.
Business insurance is ideally meant to cushion the business when disaster strikes. For example, insuring a business against a fire means that the business can recover the losses if a fire destroys property. Business owners without property insurance cannot seek compensation.
Instead, they will have to pay out of pocket to replace the damaged property. Unfortunately, some businesses may never recover, especially if the stock is destroyed. The only possible outcome, in this case, is the closure of the business.
Lack of business insurance limits growth
A business that has to keep going back to its accounts to replace a car involved in an accident or compensate workers injured while working is unlikely to reach optimal growth. Business insurance makes it possible for companies to reinvest profits into the business.
A company without insurance is unlikely to have the funds to market the business or even plan for future expansion. The uncertainty about the future forces entrepreneurs without business insurance hesitant about expanding the business.
The business will not be competitive
Various companies in Singapore provide similar services. However, the most competitive companies are more popular and likely to grow faster than the least competitive companies. Companies that have no business insurance cannot take the same risks as those with insurance.
A business that is likely to lose everything in case disaster strikes is unlikely to have the same level of investment as a company that is likely to receive compensation. This explains the stagnation of businesses without insurance.
All businesses are running a risk. Every day that your business opens its doors to customers, you are taking a risk. Whenever you put in more money in the business, whether you are buying stock or property, you risk losing it to theft, fire or any other disaster.
Establishing a business is not easy. It takes time, money, and energy to get it off the ground. The best way to ensure none of your investment goes to waste is by insuring your business.