While 63% of businesses experienced liability incidents in the past year, only half have business liability insurance
A wide-reaching study of firms in Asia has found that many businesses are falling short on mitigating prevalent liability risks.
Amid a rapidly changing risk landscape in Asia, largely driven by new technologies, liability risks are not being fully covered by businesses in the region, found a new QBE report.
The report, The Risks of Regret, looked at current and future business challenges, and how well-prepared companies are to deal with risk. It is based on interviews with nearly 1,198 SMEs and large corporations in Hong Kong, Indonesia, Malaysia and Singapore.
QBE’s research revealed only 50% of businesses in the region have business liability insurance, and 67% are aware of it. This is despite 63% of businesses experiencing liability incidents in the past year.
“Our research shows that liability risks are among the most unrecognised and under-protected business issues in the region,” said Marcelo Teixeira, head of strategic development, Emerging Markets Division at QBE Insurance Group.
“This is very concerning, because it potentially puts businesses, clients and the public at risk, raising issues around social responsibility. Many businesses are also missing out on compensation opportunities.”
Ownership of business liability insurance is 54% in Indonesia and Singapore, 47% in Hong Kong and 45% in Malaysia. The report also found that 95% of companies have some form of general business insurance, such as accident and property cover.
The research further revealed a trend for companies to be reactive rather than proactive when it comes to business risks. Of the companies that had public or third-party liability issues due to accidents or business negligence, 42% invested in business liability cover after an incident occurred.
Business liability insurance was purchased afterward by 50% of companies who experienced customer or payment internet fraud.
“While it is, perhaps, understandable that many companies tend to react after an incident, we were surprised by how many said they still took no protection action whatsoever,” added Teixeira.
“Clearly an educational effort is needed as far too many companies appear unaware of the value of insurance versus the costs that they will incur if they experience an incident.”