Mustafa O. Vazayil – Managing Director of Gargash Insurance
Mustafa O Vazayil, Managing Director, Gargash Insurance, shares insights on why small and medium enterprises should not give a short shrift to insurance coverage
By Suneeti Ahuja-Kohli
Published: Wed 25 Oct 2023, 2:20 PM
Recent crises, first the Global Financial Crisis and then the COVID-19 pandemic a decade later, have underscored the crucial role of insurance, particularly for small and medium enterprises.
“SMEs equipped with credit insurance during those times were somewhat shielded from unexpected revenue declines. Business owners could meet some of their financial obligations through insurance despite losses resulting from business closures and challenges of bad debt,” stated Mustafa O. Vazayil, Managing Director of Gargash Insurance.
However, a considerable number of small and medium enterprises overlook the importance of insurance coverage. Vazayil noted that as many as 50 per cent of SMEs operating in the UAE are inadequately covered. “Various factors contribute to this situation. Primarily, SMEs lack a comprehensive understanding and appreciation of the risks associated with their operations. There’s a deficit in knowledge regarding insurance products and awareness of the risks stemming from business and trade activities. Credit risk is ingrained in the operations of numerous businesses. Additionally, emerging risks like cybersecurity further compound the situation. At Gargash, we have been providing insurance for SMEs for three decades. Our advisors recognise that each SME is unique, be it a restaurant, a small contractor, a midsize law firm, or a grocery store. The requirements of these businesses vary significantly. We possess the expertise and resources, both human and technological, to comprehend these specific needs and provide tailored service,” Vazayil added.
SMEs are not merely trading entities; they represent the lifeblood of a nation’s activities, stimulating demand for goods and services. They drive the economy, especially in the case of the UAE, where a thriving SME sector ensures a stable economic ecosystem.
Globally, SMEs constitute a significant proportion of businesses, making up approximately 60-70 per cent of the business sector. The UAE mirrors this trend, with SMEs comprising a substantial majority – potentially around 75-80 per cent – of its businesses, contributing over 60 per cent to the non-oil GDP of the country.
By 2030, it is anticipated that about a million SMEs will be operating in the UAE. This marks an 80 per cent increase from the 2022 levels of over 550,000.
Discussing their economic impact, Vazayil anticipates sustained growth momentum in hospitality, transportation and logistics, employee benefits, construction, and the real estate sector.
The insurance sector in the UAE is undergoing a gradual evolution, with an increased focus on enhanced regulation to serve consumers more efficiently. The country is experiencing increased regulatory oversight and checks, improving the quality of the regulatory framework. Consequently, insurance companies are adapting to a more disciplined and well-regulated market.
But does the SME sector need further regulation to ensure adequate coverage? Vazayil disagrees. “This is a free market. I don’t believe regulators in the UAE would opt to mandate specific types of insurance for SMEs. It is within the purview of businesses to evaluate their risks and make decisions. We can’t have a situation where everything is mandated. The free market doesn’t operate in that manner.”
Businesses need to comprehend that insurance is not a luxury, but a necessity, Vazayil emphasises.
SME insurance is fundamentally critical, especially for startups and businesses in their early stages. “Safeguarding investments and mitigating risks are of paramount importance for SMEs. However, businesses should bear in mind that ‘cheap’ does not always equate to the best option. When embarking on a new business venture, cost-consciousness is understandable. Nonetheless, this should not compromise the selection of a provider or the policy purchased. Businesses must ensure adequate coverage,” he added.
Gargash Insurance places a strong emphasis on serving SMEs. Over 75 per cent of Gargash’s portfolio is SME-based, underscoring their dedication to servicing and empowering these vital economic players.
The firm anticipates a potential growth of 15 to 20 per cent in its premium handled for this financial year.
Business
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : KhaleejTimes – https://www.khaleejtimes.com/business/almost-half-of-smes-are-not-adequately-insured-gargash-insurance