While the global economic crisis has had a negative impact on various aspects of our lives, the one area that seems to have suffered the most is the business sector. This is not surprising when you realise that businesses offer far more than simply goods and services. They represent an integral part of our socio-economic structure and are an indispensable part of the functioning of our society.
Therefore, while the economic downturn was indeed a challenge for many business owners, investing in business insurance policies has become even more difficult during this recent pandemic. However, despite the difficulties involved in buying business insurance, there are many benefits that cannot be ignored. In fact, these benefits may well have been hiding right under your nose all along! So why are business insurance policies so important?
First of all, business insurance is an essential component of the business continuity planning process. While the recession has dampened consumer spending, it is also true that the presence of a good business insurance broker can ensure that business expenses do not spiral out of control during a time of financial hardship. A competent business broker can work with business owners to identify specific risks associated with particular business activities and can help to ensure that these activities are mitigated. Indeed, during an emergency, the ability of a business insurance broker to work with business owners effectively during times of crisis will go a long way towards ensuring that any company's assets are not lost, its revenue generated does not suffer and costs are limited.
Secondly, buying business insurance during a recession goes a long way towards protecting your assets. As we have seen, several industries have suffered substantial losses due to the recession and some have yet to fully recover. Some large corporations have already announced their intention to move out of the UK, while smaller companies may struggle to compete in a marketplace that remains highly competitive and unstable. In addition, government regulators are likely to continue to scrutinise many areas of the economy, including the activities of businesses and organizations, during the recession, potentially putting companies at risk of encountering legal problems and being taken off track.
Moreover, business insurance is essential if you wish to protect your business assets during the post-recession period. One of the main arguments that business owners make against buying business insurance during covid-19 is the fear that they would not be able to get a fair deal during the economic turmoil. In addition, there are concerns that under the terms of the Covid-19 contract, insurance companies could increase premiums during the recession, thereby reducing the amount available to businesses in a down economy. However, the European Commission has stated that the competition law provisions in the UK and EU context do not apply to insurance policies during a recession. For example, the Commission has threatened to ban the sale of health insurance in the UK and restrict what insurers can say about future risks faced by their customers, unless they offer similar protection.
It is therefore clear that business insurance during a covid-19 crisis should be seen as a major asset, rather than something to be avoided at all costs. Business owners would have to decide whether the benefits outweigh the risks and whether the benefits are adequate for their particular circumstances. There is no doubt that business owners would want to be absolutely sure that their business assets – even in the best of times – are protected from any unforeseen events. The recent outbreak of swine flu is a reminder that we cannot take chances when it comes to protecting our firms and our companies from the risks associated with pandemic-related insurance.
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