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Why small business owners are losing sleep

Oct 10, 2017

Information supplied by Vero Insurance.

AustBrokers Comsure’s panel of Insurers from time to time, provide us with fascinating insights for our client base. SME (Small to Medium Enterprise) is a significant segment for our business & we thought the following article may be of interest to you.

The information below is provided by VERO, a major Insurer for AustBrokers Comsure in this SME space. They simply get SME businesses & what an SME does day in & day out. This makes our job at AustBrokers Comsure easier especially when we handle claims for our valued & important SME clients.

“Anyone who runs their own business will be familiar with the disturbing fact that from time to time, your sleep will be interrupted. Staring at the ceiling at 3:00 am is rarely a pleasant experience, especially as the night time darkness always seems to emphasise the severity of our problems while robbing us of possible solutions.

Vero’s research reveals that while a significant percentage of small to medium business owners (SMEs) worry that a catastrophe might interrupt their ability to trade, a much smaller number are covered against such an eventuality. Over 30% of SMEs are concerned about a disaster robbing them of their revenue stream for an extended period while a similar percentage fear equipment failures could negatively impact their business. Yet 80% of these business owners say they are not covered for either of these insurable events. How can so many people rationalise their failure to protect themselves against acknowledged fears?

There are several possible – if not credible – explanations for this. Something inside us tells us that disasters only ever happen to other people. Everyone fears a plane crash, but that doesn’t stop them flying. Others dread visiting the dentist, but a severe tooth ache can rapidly change their minds.

Psychologists have spent some time studying this human ability to separate emotions like fear from the rational response to it. As Harvard University psychology consultant David Ropeik puts it, “the fears don’t match the facts”. He explains that our reactions to risks are instant while it takes more time for us to form our rational responses.

The ‘fight or flight’ centre of the brain – the Amygdala – reacts immediately to a threat. It then sends messages to the pre-frontal cortex where cognitive responses are formed. The reasoning brain can then say ‘now we know what the threat is, let’s work out what we should do about it.’ In other words, our brains are hard wired to fear instantly (causing us to stare at the ceiling in the middle of the night) and think later (motivating us to act).

Unfortunately, there is another cause for failing to cover insurable risks. A perception that the cost of insuring against a business catastrophe can be a prohibitive barrier. Once again, when the logical brain takes over, it will tell you that compared to the ultimate price of going out of business, the premiums seem very reasonable indeed.

A case in point is the subject of a video case study on a fire that severely impacted a workshop in Victoria. The business owner was horrified to discover that the business couldn’t continue to run until a complete rebuild was completed. Please contact your Adviser at AustBrokers Comsure is you would like a copy of the video.

His Insurance Adviser had included Vero business interruption insurance in his package. An immediate payment was made to him and he was trading from rented premises nearby within two weeks. Today, the business is back up and running in its rebuilt premises.

The lessons from this sobering tale could help all SMEs sleep better at night.”

Thank you to VERO for this content, a great insight & hopefully it will help others sleep better at night.

If our Insurance Advisers can assist you with additional insurance coverage, or should you just want to ensure cover is in place, please do not hesitate to contact us on
1800 122 194.

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