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How Emerging Risks Influence Your Business Insurance

Do you know what the top emerging risks are in business today and how they could impact your insurance? Learn more about the leading business risks in South Africa and their impact on the insurance world.

Businesses face new risks every day. From cyber attacks to natural disasters, these threats can cause significant damage to your company. To stay ahead of the game, you need to be aware of emerging risks. This means understanding where they come from, who might attack them, and how to prepare.

What is the Top Common Risk Businesses Face According to insurers?

Fire is the top common risk businesses face. It’s no wonder fire insurance was part of how business cover began in history. One catastrophic event could cost you everything, especially if you aren’t insured.

Why is Fire a Top Business Risk?

Fire damage can devastate almost any business, not only by the loss of assets and infrastructure but also by interrupting its ability to continue normal operations. South Africa is familiar with the effects of large fires, such as the Charlotte Maxeke Academic Hospital Fire and the Table Mountain National Park fire.

Fire claims and the risk of fire in your organisation can impact your insurance premiums. For example, if you work with flammable material, your risk may be greater. If your organisation is large, the cost may be more. If your business premises are in a high-risk area for seasonal fires, you may need to pay more for your cover.

What Other Risks Could Affect My Insurance Costs?

Did you know that emerging risks in South Africa can also influence your insurance costs? Every type of business has unique risks and may face cost increases depending on their type of cover. It is also important to understand the state of the insurance industry to assess how the top emerging risks will affect your cover.

What Are Some Emerging Risks Businesses Should Consider?

Your business may face unique risks, but there are specific emerging risks to consider in the current economic climate. Economic instability is, for example, an enormous risk for companies in South Africa. If our Rand continues to fall in value, it could affect your business continuity.

Are financial markets the biggest risks we should consider, or is the war a bigger concern? Different research projects found the leading concerns among South African business owners in 2022. Find out what they are and if they influence your insurance policy with these risk insights.

What Are the Top 5 Emerging Concerns in South Africa?

1. The South African Economy

South Africa’s struggling economy comes in first at 62%, according to research by Santam. Whether you are in the financial services sector or working as a handyman, our economic climate can affect you.

Aside from our junk status label as a country, industry declines because of the pandemic have been observed. Industries such as heavy haulage, taxis and e-hailing, aviation, marine, travel, and hospitality have all contracted because of the economic challenges of the past 2 years.

2. Blackouts

Blackouts that impact critical infrastructure (such as those that occur during load shedding) have become a greater emerging concern for South African businesses. When we cannot rely on the grid, our options are to stop work and suffer losses or to source alternative power solutions. Unfortunately, alternative power is not always feasible or affordable for businesses.

Sudden power interruptions can cause damage to electronic equipment, and this property damage could be expensive. Aside from the costs of office equipment service & repair, the time lost in business activity while waiting for the machinery to be fixed could be devastating.

3. Cyber Crime & Cyber Risk

In the last 2 years, the world has gone digital more than ever before. Services such as Zoom and Uber saw massive increases. At the same time, cyber crime skyrocketed. Cyber risks are a top emerging concern.

If your organisation has not considered the impact of the POPI Act or cyber crimes, it could cost you. Cyber insurance is an important form of cover to consider.

4. Business Interruption

Business Interruption due to unforeseen events (such as the COVID-19 pandemic lockdowns or strikes) has become a greater concern since 2020 and the complete economic shutdown that occurred. Business interruption insurance is, therefore, an important form of cover to consider when building your insurance portfolio.

5. Political Violence & Risks

Thanks to the KZN riots of 2021, political and violent risks have become a strong emerging concern. In fact, it has moved to one of the top 5 spots according to the Allianz Risk Barometer 2022. Many businesses suffer3e property damage and stock losses due to looting and vandalism in the civil commotion in 2021.

Building maintenance costs and resupplying stock was too challenging, and many businesses had to close as a result. Luckily, there is insurance available for these complex risks in the form of SASRIA coverage. You can find out from your insurer what SASRIA coverage you have if you already have a form of business insurance.

How Have Emerging Risks Impacted Insurance?

Since the start of the pandemic, many businesses moved to skeleton staff, changed their business model altogether, or closed down for periods. With all the upheaval, liability risks have gone up around the world. This has caused reinsurance rates to go up globally.

These higher reinsurance rates have impacted insurance companies, as they took on more risk over the period. Because of this increase and the increase in risks, business insurance premiums have often risen, too.

How Are Business Owners Responding?

Most large companies have not reduced their cover, but a trend towards shopping for the best cover options is emerging. Businesses are looking for the insurance company that offer them the most value for money.

Some of the smaller businesses have chosen not to renew their insurance coverage or to delay renewing their policies. Other businesses who have a custom solution for insurance have decided to adjust their cover. It should be clear, however, that stopping or delaying your insurance cover isn’t the best move when considering the above emerging risks.

In fact, you might want to consider getting additional insurance for risks you may not have been aware of before, such as cyber risks. In addition, liability insurance is pivotal. Whether you are in the financial services industry or motor traders, it is important to protect your business against loss, medical expenses, and liability claims with products like truck insurance and public liability cover.

Other forms of cover to consider include goods in transit insurance, fleet insurance, and business interruption insurance. Discovery business insurance offers customers classical cover for common perils, and Budget Business Cover offers affordable cover options. But you don’t have to shop around.

The current economy makes saving on insurance and getting the best cover so much more important. If you want to start your better insurance journey today, you can start by filling in the form on this page. Our high-tech system is designed to match you with the perfect insurer for your needs, and they will contact you with a no-obligation quote.

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