Leading global insurance company, AXA highlights the significance of SMEs for the economy of Dubai, as SMEs represents 95% of all establishments in the Emirate. These SME businesses account for 42% of the workforce and contribute around 40% to the total value generated in Dubai’s economy.
The insurance company feels that SMEs dont have sufficient insurance that can help them mitigate risks and avoid large financial repercussions. And, speaking on the issue, Ricardo Arroyo, Chief Commercial Lines Officer at AXA in the Gulf, said “Dubai is acknowledged as one of the easiest places to establish an SME business and the government is stimulating entrepreneurship in the emirate through economic incentives that will attract more investment. However, despite the resilience of small businesses in the UAE, many are unprepared for the challenges they can face after setting up.”
AXA is keen to encourage SMEs to seek an appropriate level of cover so that they receive comprehensive protection against threats, which can affect their day-to-day operations. To this end, AXA has identified the five biggest challenges and reasons for SMEs to seek insurance coverage:
EQUIPMENT BREAKDOWN: Incurring costs of unforeseen damage to equipment or hardware can be very expensive. A strong insurance plan can help SMEs to cover the costs of repair or replace the required equipment.
PROBLEMS WITH SUPPLIERS: Some SMEs that are reliant on a specific segment can also be affected if their suppliers face issues (such as damages during distribution or challenges in delivery) – making it imperative to be covered if they don’t have a backup plan.
CYBER ATTACKS: It is estimated that the cost of cybercrime globally will rise to USD6 trillion annually by 2021. Furthermore, the average cost of cyber-security can amount to USD85k-USD150k for SMEs. With start-ups increasingly looking to innovate and capitalise on the operational efficiencies that digital platforms can provide, many SMEs find themselves inadequately prepared to deal with the consequences of a cyber-attack and may not have the finances available to recover if not adequately insured.
OFFICE INSURANCE: Any office space can be susceptible to an unforeseen accident such as a fire, which can result in large damages. At a small and medium enterprise, office damages can have far more consequence on business operations in comparison to a larger company.
LOSS OF WAGES: In the event that an SME is financially overleveraged or is unable to pay its employees due to lack of funds, having insurance that ensures workers’ compensation can be critical. Not only does this fulfil any obligations towards staff, but it also ensures that the business cannot be sued for negligence.
Ricardo continued, “Successful SMEs in the UAE have registered strong compound growth over the last few years. Our experience shows that for these businesses, insurance plays a key role. Maintaining adequate cover for SMEs is vital, as unlike large companies, SMEs operate on small margins and the smallest disruption or jump in operating costs can paralyse their business model.”
“AXA is a business partner for all your SME insurance needs. Our Business Secure pack includes all of the essential covers under one policy with additional elements designed specifically to suit a wide variety of business activities that includes retail outlets, beauty salons, restaurants/cafés and hospitality. Our dedicated team of experts can advise you on the best solutions to protect your business.”
