Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on July 6, 2017

PETALING JAYA: Over a third of Malaysian companies expect the current challenging business conditions to continue over the next 12 months, according to the latest survey by Australia’s QBE Insurance Group Ltd.

In a report titled “The Risks of Regret”, the insurer noted about 37% of the respondents predict a slowdown in their business, and 36% of them also foresee higher input costs and low profitability.

Meanwhile, over a quarter, about 28%, of Malaysian firms surveyed expect to see increased advancement investment in technology and innovation to impact their business.

The survey was conducted between April and May this year with some 300 small and medium enterprises (SMEs) and large corporations across various industries in Malaysia.

QBE Insurance (M) Bhd chief executive officer Leo Zanolini (pic) said amid the current economic challenges and increasing pressure to invest in new technologies, companies need to ensure they are safeguarding their business adequately.

“Many Malaysian companies only take action to address business liability risks after experiencing an incident,” he told a media briefing yesterday.

“We were surprised to see a pattern which shows that companies are likely to take out business liability insurance only after a crisis hits,” Zanolini added.

In the past 12 months, the most frequent risks faced by Malaysian companies included legal and regulatory compliance issues (28%), loss of income due to business interruption (27%), staff injuries while working (24%), damaged or loss of inventory (22%), equipment breakdown (21%) and public or third-party liability due to issues with products or services (18%).

Based on the report, some of the reasons on why the Malaysian companies do not own business liability insurance, include their businesses are too small and the costs are bigger than the risks (45%), budget issues (41%) and some even cited that they have other business priorities (29%).

Zanolini also noted that while awareness of general business insurance is high, that of business liability and professional indemnity insurance is still low.

Nearly all Malaysian respondents (96%) have some form of business insurance, including general accident and employees’ compensation cover.

“However, the awareness and take-up of business liability insurance protection is far lower,” he said.

The report found that less than half (45%) of Malaysian SMEs and large companies currently have business liability cover and 64% of businesses are aware of it.

Zanolini explained that both awareness and usage of professional indemnity insurance stood at 27% and 19% respectively. While public and product liability insurance stood at 31% and 21% respectively.

“This is a concern as it potentially puts their businesses, clients and the public at risk — and they are missing out on compensation opportunities,” he said.

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