Premiums for the commercial and speciality insurance sector here have come down in the past couple of years, yet small- and medium-sized enterprises (SMEs) remain under-insured, according to an industry executive yesterday.
Mr Karl Hamann, chief executive officer of QBE Insurance (Singapore), said that excess capital means commercial insurers around the world can write more premiums, resulting in a competitive market.
"Our view is that it is at the lower end of the (premium price) cycle; we do have insurers that are locking in policies for a couple of years," he added, but declined to indicate whether premiums would rise or fall.
Mr Hamann was speaking at a briefing about a QBE survey on how susceptible SMEs are to business risks. It found that one in seven smaller SMEs - with five to 20 staff or revenue under $1 million - did not have any business insurance.
"The perception is that (commercial insurance) is a commodity product rather than a necessity... So long as I have the minimum cover needed, I'm not interested in buying extra insurance - that was 56 per cent of the respondents indicating that," Mr Hamann noted.
The risk of business interruption was the most under-insured risk, with the loss of key staff next, according to the survey, which polled 450 SMEs here with between five and 200 employees and annual revenue of up to $100 million.
SMEs employ almost 70 per cent of working people here and accounted for 48 per cent of Singapore's GDP last year, so this "de-emphasis on risk" could have worrying long-term impact, QBE said in a statement.
The survey also found that local SMEs make insurance purchasing decisions without undertaking adequate research. About 64 per cent of the smaller SMEs said policies from different insurers looked relatively similar overall, while 67 per cent of all SMEs surveyed believed price was the most important concern when choosing cover.
These SMEs failed to take into account how more specific offerings best fit their individual needs, said QBE, which is based in Australia.
Smaller SMEs were also less concerned than larger ones about business risks because they are more focused on short-term considerations, like retaining customers and reducing costs, compared with larger firms.
"SMEs need to be better prepared for even the most common risks... Ignoring these possibilities by approaching insurance as a one-size- fits-all commodity is a dangerous game to play in Singapore's competitive business landscape," Mr Hamann said in a statement.