How has Covid-19 changed your business risk profile?

COVID-19

After more than seven months of one of the strictest global lockdowns, South African businesses have shown that they can adapt to dramatically changed circumstances, with many businesses pivoting to take advantage of opportunities in the new business environment.

As the country moves between different levels of lockdown, circumstances continue to change, and business continue to adjust.

An easily recognisable pivot, for instance, was that of clothing manufacturers who started producing cloth masks and personal protective equipment (PPE) for health workers and the general public,” says Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers.

“However, in most scenarios where businesses pivot, their risk profile change, and their insurance requirements also change.”

He outlines a few scenarios and how they would change a business insurance risk profile:

  • A clothing store that switched to an online distribution model – this carries new risk related to how you store your customers’ data, particularly considering the Protection of Personal Information Act (POPIA). From 1 July 2020, South African companies have less than one year to ensure compliance with POPIA, which targets the containment of negligent usage or the misuse of personal data, as well as the protection of privacy rights.
  • A restaurant that started incorporating deliveries to replace sit-down meals – they would have to buy delivery vehicles such as motorbikes to deliver the meals. The restaurant would have to contact its broker or insurer to add the delivery vehicles to its insured assets and would also need to take out the appropriate vehicle insurance to cover the increased risk due to the change in profile of the business.
  • Physical addition of perspex dividers and security gates to reinforce physical distancing – these new additions could potentially improve the security profile of the business. It is extremely important to advise your broker or insurer of additions and alterations to the insured property, while the contractor is on site as well as making sure that the appropriate short-term insurance cover is in place during the alterations, in complying with Covid-19 regulations.
  • Furniture companies which saw increased sales during the lockdown – as more people started working from home, the sales of furniture such as chairs and office desks spiked. Furniture companies would have had to contact their broker or insurer to advise them of a change in order frequency as well as the increased stock kept in storage. These companies may also have had to increase their transit insurance since the furniture remains the liability of the company until it is delivered to the buyer.
  • Companies who pivoted to use their vehicles for deliveries – if these companies were specifically now offering their vehicles as delivery vehicles on behalf of other companies and not just for own use, they would need to advise their broker or insurer of the change in use of vehicle as well as take out transit insurance for any goods that they transport.

A business pivot could include something as simple as allowing your staff to work from home.

A number of businesses were forced to adapt to this new way of working during lockdown and some are considering continuing with this arrangement. This means that employees need to be equipped with tools such as laptops.

The overall effect of the new work-from-home policies is that previously there were some assets that were typically kept at work such as printers or desktop computers.

“If you have now given your employee permission to take and use those assets at home, you have to inform your broker or insurer so they can extend the cover on those assets to all risks cover or extend the policy to cover these assets while they are in the possession of your employees,” Maupa says.

“The world in which your business operates and the way in which it operates is going to change faster than ever before. Just as your business had to adapt to a ‘new normal’, you need to regularly step back, reassess your risk and make sure that you adapt your insurance so that you are correctly and adequately covered,” concludes Maupa.

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