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Why SMEs need insurance to be sustainable

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Small and medium enterprises (SMEs) across the region have experienced unprecedented growth in recent years, accounting for 96 percent of firms in ASEAN member states (ASEAN SME Policy Index). This is despite tough conditions such as increased political risks, higher business costs and a tighter labour market making it more difficult to attract the right talent.

As the business landscape across Asia-Pacific rapidly changes and expands, SMEs are exposed to even greater risks. Increased globalisation has created a greater need for business travel; workplace health and safety regulations have become more stringent; and cyber-attacks are now a common threat for businesses of all sizes. A recent Frost & Sullivan study commissioned by Microsoft revealed that, in 2017, cybersecurity threats cost organisations in Singapore US$17.7 billion in economic losses. The study also reported that one in two organisations (53%) in Singapore have either experienced a cyber-attack, or are unsure if they had a security incident. Across Asia Pacific, potential economic losses due to cyber security breaches can amount to a staggering US$1.745 trillion, more than seven percent of the region’s total GDP of US$24.3 trillion. However, despite these significant figures and increased risks, many SMEs are inadequately equipped with sufficient insurance coverage to keep their businesses afloat should a fortuitous event occur.

The need for adequate insurance to help businesses grow and succeed in the region has never been greater.

So how does insurance support the growth of SME’s?

  • It plays a significant role in risk management by mitigating threats. Although most SMEs have insurance such as public liability insurance to satisfy contract conditions or landlord requirements, many don’t have adequate insurance policies that indemnify them against other financial or asset losses.
  • It provides much needed financial support for complex business risk exposure, such as reputational risk, trade secret risk, political or regulatory risk.
  • It is crucial for sustainability. SMEs generally are unable to afford large losses caused by business interruptions or closures, loss of income, supply-chain delays or damage to neighbouring properties.


For SMEs, insurance premiums may seem high and insurance coverage complex, with many SME owners not having a proper understanding of the risks, or how underinsurance or having no insurance can be catastrophic to them. These businesses may not have been able to withstand the financial impacts had the right insurance policies not been in place.

Professional insurance intermediaries can help educate SMEs about how insurance adds financial stability to their business; the underlying risks SMEs face on a daily basis; and the various types of insurance SMEs can purchase to mitigate these risks. Once SMEs better understand how insurance can help their specific business and risks, they would be in a better position to thrive in the long term in this growing region. After all, sustainability is critical for any business.


This content is brought to you by Chubb Insurance Malaysia Berhad, Registration No. 197001000564 (9827-A) (“Chubb”) as a convenience to readers and is not intended to constitute advice or recommendations upon which a reader may rely. Any references to insurance cover are general in nature only and may not suit your particular circumstances. Chubb does not take into account your personal objectives, financial situation or needs and any insurance cover referred to is subject to the terms, conditions and exclusions set out in the relevant policy wording. Please obtain and read carefully the relevant insurance policy before deciding to acquire any insurance product. A policy wording can be obtained at, through your broker or by contacting any of the Chubb offices or Chubb agents. Chubb makes no warranty or guarantee about the accuracy, completeness, or adequacy of this content. It is the responsibility of the reader to evaluate the quality and accuracy of material herein.

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