Many township-based businesses that predominantly operate in informal environments are either not insured or are underinsured, as proven in the riots that took place last year July in the country, which leaves them exposed to more impact when faced with unforeseen losses and events.
According to results of the FinScope SA Survey on SMMEs for 2020 published in July 2021, 67% of township-based businesses in South Africa are uninsured, while only 33% have either Employee Benefits insurance or Business Insurance. The results also showed that only 15% of the businesses that were surveyed were uninsurable.
Mmabatho Letoaba, FNB Insurance Brokers Product Specialist says non-life business insurance provides any business, regardless of its nature or size, with peace of mind knowing that their business will be able to recover and trade in the unfortunate event of damage or loss to property.
“Having adequate insurance helps businesses to quickly resume operations, recover lost income, or replace stock, machinery, assets, or property that has been severely damaged” says Letoaba.
Francinah Phalatsi, Business Development Manager at FNB Commercial, says “through our various engagements with township-based businesses, we have observed that most businesses do not understand the value of insurance and therefore find it difficult to see the value of this type of cover”.
“Another common misconception is that most business insurance policies are not designed or suitable for township-based businesses. This is incorrect, as having insurance in place helps businesses save time and money, while ensuring that they are adequately covered.
“Furthermore, once the business is covered, it is important to maintain accurate and up to date insurance policies to avoid delays in the event of a claim,” explains Phalatsi.
Our research shows that there is a greater need to educate township-based businesses about financial products. As a result, the bank continues to do this through various programmes and initiatives.
“We remain committed to driving financial inclusion, uplifting and helping township-based businesses to adopt formal business practices and money management solutions, such as non-life insurance, that could unlock several benefits in the long-term,” concludes Letoaba.