Undertaking or managing a business is an adventure, and one of the main objectives is to achieve the stability and security of the company. Indicators that the company is in good health are growth and profits, but even in good times, things can be upset by some unforeseen event: a financial crisis, a natural disaster, a theft, a fire. There are multiple risks to which a businessman is exposed and whose effects he cannot control, but he can face them when he has insurance.
Statistically, large companies contract the most insurance, because through volume of operations and value they are more aware of the importance of protecting themselves against various risks.
On the opposite side are the micro, small and medium enterprises (SMEs), where the culture of insurance does not have the same penetration and, according to the Asociación Mexicana de Instituciones de Seguros (AMIS) (Mexican Association of Insurance Institutions), only 2 percent of micro, 5 percent of small and 30 percent of medium-sized companies are insured. Primarily, these low figures are due to the beliefs that contracting insurance is not necessary or corporate insurance is expensive. A curious fact is that, according to the Instituto Nacional de Estadística y Geografía (INEGI) (National Institute of Statistics and Geography), of the more than 5 million companies in Mexico, approximately 90 percent are SMEs.
Each Company Is a World
According to Roberto Castellanos Omaña, international general director of Novamar Insurance Mexico and prominent member of the national board of directors of the Asociación Mexicana de Agentes de Seguros y Fianzas, A.C. (AMASFAC) (Mexican Association of Insurance Agents and Surety), a company must invest in corporate insurance regardless of its size or the industry to which it belongs. To do this, you must find the insurer that, through personal advice and analysis, provides you with the best coverage.
“The objective of an insurer is to help maintain the continuity of the operations of the insured companies in the most efficient and profitable way, protecting their corporate investments. In our case, we identify the risks in the operation and in the work processes, as well as the interruption of the business, contingencies and interdependence, operational, professional and product liability, breakage of machinery, security measures and crimes, among other items. In addition, we design a risk management program, working together with the operations, maintenance and financial staff, and conduct a study of the operation, culture, mission and vision of the company. In this way, by identifying all the characteristics and specific needs, we negotiate the best conditions and coverage with the insurance companies,” says Castellanos.
What Should a Company Protect?
“A company must insure the building in which it is located, the walls of the same, as well as the features surrounding the exterior, such as courtyards, road accesses and perimeter fences. If you also operate in other locations, you must list those branches and your assets, for which a multi-location policy applies, specifying the value, characteristics and contents of each building. The contents must cover furniture and office equipment, inventory—classified as raw material, in process, finished product and for sale to the public, also consequential losses and fixed expenses. In case the company operates in a rented space, the insurer must analyze the lease agreements and see that the tenant’s liability coverage is met.”
As indicated by the Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros (CONDUSEF) (National Commission for the Protection and Defense of Users of Financial Services), the most common coverage should include protection against hydrometeorological phenomena (losses and damages due to rain and hurricanes), fires (including furniture and own or leased buildings), removal of debris, machinery and equipment (in which case, rental of equipment similar to that damaged is granted in order to continue operating), also electronic machinery and equipment, broken glass and illuminated signs, theft of goods (merchandise, money and securities), motor vehicles, civil liability, protection against interruption of activities, as well as assistance with locksmith services, plumbing, cleaning and legal services, among others. Companies belonging to very specific industries can also add special coverages.
Security and Protection: An Investment Within the Reach of All
Castellanos says that, despite its minimal presence among SMEs, insurance is essential for companies, and that, contrary to belief, it can be contracted by any type of business. “Many standardized insurance products already exist on the market, made to measure and with very affordable prices. In our case, we have a package specifically designed for SMEs, with monthly rates ranging between $150 and $200 pesos, which includes coverage for building, content, liability, damage and breakage of machinery, electronic equipment and glass, theft and hydrometeorological phenomena. In recent years, insurers have made an effort to promote the culture of insurance among micro, small and medium-sized businesses, helping them understand that everyone is at risk for having losses, either through theft or fire, and how difficult it may be to face these without being insured,” he concludes.