The risky business of no insurance hits South African merchants and SMEs
Business insurance is a necessity for any business, whether that undertaking is a spaza shop or a multi-national corporation. Sadly, many smaller businesses only realise the importance of business insurance when it’s too late.
After large-scale destructive events such as the floods in KwaZulu-Natal in April 2022 or the widespread looting in July 2021, story after story detail regretful accounts of business owners having to close shop because they were either under- or uninsured. Businesses that operate in informal sectors are most likely to fall into this category: Around 67% of township-based businesses in South Africa are uninsured, while a further 15% are uninsurable by traditional standards.
This makes underinsurance a key challenge for South Africa’s business sector, especially when you consider that SMEs represent 98% of businesses in the country.
Why merchants and SMEs skip insurance
The perception that insurance is expensive, inaccessible, and difficult to qualify for and obtain persists among the small business community, says Zunaid Miya, Managing Director of local fintech Hello Pay. Hello Pay forms part of a larger eco-system, the Hello Group. “The Hello Group has spent the better part of two decades disrupting the space in which marginalised and underserved communities operate. The added monthly expense of insurance cover is also a deterrent. Many business owners are under the misconception that they can’t afford an insurance product or will select an insurance product which is inadequate to their needs as a cost cutting mechanism, with serious consequences.”
“Adequate business insurance cover provides any business, regardless of its nature or size, with peace of mind that the business will be able to recover and resume trade in the unfortunate event of damage or loss to property. This is essential to replace stock or assets, recover lost income, and quickly resume operations to keep the business afloat if disaster strikes,” adds Miya.
The solution
As champions of financial inclusion and SME growth in South Africa, the Hello Group through Hello Pay recently expanded its product offering by making Hello Protect business insurance cover available to its customers from as little as R60 per month.
This forms part of Hello Group’s Business Solution package, a turn-key suite of business solutions that enable growth, save costs, and give users peace of mind that financial access is available to them when they need it. With a Hello Paisa bank account and a Hello Pay POS device, users get access to a suite of services they would otherwise have to procure from multiple companies – including loans, business cover and armed response.
Hello Paisa banking customers automatically qualify for insurance – they simply need to activate it on the Hello Paisa app, where they can manage their portfolio as well.
Businesses in informal sectors will especially benefit from this offering, says Miya. “The regular looting of spaza shops and other businesses within the informal sector is a reality and has undoubtedly become concerning for business owners. Many small business owners often operate in remote and unsafe areas where they are exposed to looting, crime and loss events due to dilapidated infrastructure. The business insurance product is underwritten by Santam LTD and includes SASRIA, meaning customers will be covered in the event of civil commotion, public disorder, strikes, riots, and terrorism, many of which impact the migrant and informal markets.”
“Our aim is to level the playing field. The Hello Group offers customers the same opportunities as everyone else, at affordable prices and with added convenience. This allows anyone, whether a small street vendor or a burgeoning SME, to grow their businesses – safely and efficiently,” says Miya.