Why do UAE SMEs not go for insurance covers?
Experts have warned that the insurance uptake among small and medium enterprises (SMEs) in the UAE has gone down to “worryingly low” levels.
Several SMEs do not have any insurance cover, placing their assets at financial risk in the event of an emergency, says financial advisory firm Nexus Group.
SMEs make up more than 94 per cent of businesses in the country, with the sector contributing more than 60 per cent to the UAE’s gross domestic product (GDP). SMEs also account for 86 per cent of the country’s private sector workforce.
Lack of awareness is the main culprit, leaving many small firms unprepared for an emergency and facing serious financial repercussions.
“What we have generally observed in the UAE and the region is that many SMEs unfortunately do not recognise the importance of insurance – the focus is on what is required as opposed to what is advisable,” says Phil Ashkuri, head of General Insurance at Nexus Group.
“By forgoing insurance, businesses are essentially without liability protection, placing their assets at financial risk,” Ashkuri warns.
“This can be attributed to many factors, but, predominantly, a lack of awareness and an insufficient understanding of the significant benefits of asset protection,” he adds.
Ashkuri is of the opinion that the continuous education of SMEs on the benefits of insurance and its protective role is critical to reducing the number of uninsured businesses.
“Educating companies should be a community-wide effort – financial advisors must guide their clients and providers have a responsibility to tailor products that meet the requirements of the local market,” Ashkuri concludes.