There are a lot of corporate insurance policies, right from one for the employees, to manage their health and safety of the workplace; ensuring physical stock to almost anything that is essential to the running of the business. However, perhaps the most important one for the financial health of the company is credit insurance. Credit insurance is a vital tool that protects your cash flow when the business cycle is taking a turn for the worse.
Now, let us take a look at some of the major features of the credit insurance policy and why you need to be covered under credit insurance. Here are the four key reasons for you to go ahead with credit insurance for your company.
1. Guaranteed Payments
The World Bank has stated that “Trade credit insurance is an insurance policy and risk management product that covers the payment risk resulting from the delivery of goods and services”. Credit insurance helps you with a collection of dues which can otherwise dampen your cash flow. As we know “cash is king” and, tight cash flows in a tight economic cycle could affect the balance sheet and in the worst case, cause a business to shut shop. A credit insurance policy will act as a safety net, thereby providing you with a platform to trade with confidence.
This policy covers up to 90% of a contract’s value and protects your company not only by reducing exposure but also by shielding you from defaulting customers and bad debts. In short, this is a vital risk management tool.
2. Grow your Business
Selling on credit can be a necessary evil for the growth of a business. While there is an element of trust when it comes to dealings with trading partners, insurers providing credit insurance have reliable tools to determine the creditworthiness of your customer. Credit insurers issue ‘early warning signals’ to your company. This is done when a potential partner is uninsurable or when previously granted insurance cover has been withdrawn. By playing a proactive role in assisting your company trade more securely, a credit insurance cover can help you make better decisions.
Thus, the sales of your company can grow and that growth will be safe growth with no to limited defaults.
3. Deterrent to Defaults
Credit insurance acts as a deterrent for those who are used to defaulting payments. Defaulters can be delisted or blacklisted from doing any further business with banks and other financial institutions i.e. the cost of compliance falls on the defaulters. This incentivizes them to keep their “credit ratings” in proper shape with credit insurers as they now understand the implications of not only losing one client but potentially many of their clients who will be alerted on their payment defaults.
4. Banker’s Comfort
When you have credit insurance, even your bankers feel more confident that your receivables are safe. This will urge them to bank with you by extending new loans and lines of credit for business expansion. Because of the higher quality of receivables backed by an insurance policy, the bank will also be more willing to extend working capital finance at lower costs.
Now that you know how credit insurance can not only safeguard your business but help it grow, it is time to find the right team of professionals to work with. New Age Insurance Brokers has hands-on experience in credit insurance across myriad industries. Please e-mail us at email@example.com and we will be more than happy to help you!
The world has been seeing massive growth in electronic communication or digital communication. From the moment we wake up till we sleep, we engage in hundreds of digital transactions knowingly or unknowingly.
When you run a business that is vested in digital services or products, it will involve your clients or customers sharing very sensitive information, which also includes various business and financial credentials. Besides client information, a technology company will also have other sensitive data such as business contracts, e-mails, pricing, employee details, etc. that can be vulnerable and thus open to exploitation.
The data on cybersecurity paints a clear picture of the type of cyber risks a business has to endure. AV-TEST registers over 350,000 new malware every single day, i.e over 127 million new malware every year! And the numbers keep on rising because data exploitation is a lucrative crime as various laws and regulations rush to catch up with this ever-evolving sector. The news of Yahoo being hacked in 2016 compromising over 3 billion accounts is an example of how damaging data breaches can be not only to short term business but long term reputation and business.
In January 2019 alone, 1,769,185,063 user accounts were breached across various hacks. So it goes without saying that like every business, a business working with digital products or services will also experience its fair share of risks. Companies that can manage cyber risk well will gain client and investor confidence and thus experience business growth. And this brings us to Cyber liability insurance.
Cyber liability insurance provides the policyholder coverage against financial losses that they may suffer from data breaches or other cyber-related events.
For example, when a business experiences a data breach like a hack where sensitive financial credentials are stolen, then the policy will offer financial support for different legal and non-legal expenses that is related to the breach.
Most Cyber liability insurance will provide financial support for the expenses incurred by the company in restoring the stolen/damaged data, securing the data on the servers and computers, etc. in addition to the legal expense support. The standard coverage found on most Cyber liability insurance covers are as follows:
- Lost incomes due to a data breach
- Extortion losses
- The amount incurred in notifying the customers
- The cost incurred in fighting class-action lawsuits
The level of coverage and additional features depends on the type of Cyber liability insurance that one chooses.
Another factor to consider when it comes to Cyber Liability Insurance is whether to choose first-party insurance or third party insurance.
First-party coverage: In this type of coverage, the insurance company will only provide coverage to the losses incurred to your company.
Third-party coverage: The insurance company will cover the legal expenses against complaints raised by the customers or from people who were affected by what happened with your business.
Starting a technology business is certainly demanding. Knowing the risks involved and having a plan B is a crucial part of the conducting business. Being a tech company, the risks are mostly related to the data integrity of both the business and its customers. Having cyber-liability insurance gives you that boost of confidence you need to take your business to new heights.
If you are wondering which other insurance policies you can use to protect yourself and your business from financial risks, then we can help! Contact NAIB today to know about various insurance policies from the best insurance providers in Dubai.
The world of business has its rewards, but it also has its risks. One of the biggest fear that prevents many from being entrepreneurs is the fear of failure. And this isn’t only about the failure to make profitable business decisions, but it is also about the fear of making mistakes.
But these risks will forever be a part of running a business, and it should not deter you from starting your own venture. Insurance policies for businesses are all about minimizing these risks, helping you realize your dreams. In this article, we will walk you through some of the best insurance policies you should opt for as a business.
1. Professional liability insurance (Errors and Omissions Insurance)
The professional liability insurance covers the legal costs that arise from defending yourself against the negligence claims made by your clients. This scenario happens when the clients face some form of losses due to the advice or service that you had provided them.
The professional liability insurance covers your legal costs and some damages that will be specified by the insurance company. Different industries have certain variations when it comes to professional indemnity insurance coverage and conditions to compensate for different circumstances.
2. Product liability insurance
If your business specializes in making products for the general market, then a product liability insurance is a must-have. Professional Liability Insurance provides coverage for damages caused by your service/advice, while Product Liability Insurance provides coverage for damages caused by your products.
You might think about why you would need such an insurance cover as you are confident in your product. And this is why many businesses get stopped in their tracks after getting a lawsuit, as they weren’t prepared for it in the first place. Save yourself from such a misconception, choose a product liability insurance to future proof your company.
Medical insurance for employees is mandatory in the Dubai and Abu Dhabi. If you are hiring someone in your business or company, they must be provided medical insurance.
In Dubai, the DHA (Dubai Health Authority) put forward the law of mandatory medical insurance and this applies to all economic areas of Dubai, including free trade zones.
4. Property Insurance
Property Insurance for businesses also known as Commercial Property Insurance offers coverage for the physical assets of your company from damages. Natural disasters are not typically covered under the insurance policy. However, this is largely up to the insurance provider.
The benefit of property insurance cover is that it protects the contents within and outside of your building, granted that they are within the same property.
When your business possesses assets that are very valuable, it is always better to insure them.
People are the engine of one’s business and taking care of them will boost their morale and hence their performance. This is where the Worker’s compensation insurance comes in. If something were to happen to them, including death, while working for you, then you are liable to pay for their medical bills and work benefits.
One can combine Workmen’s Compensation with a Group Life policy at a nominal cost thereby providing your employees with a safety net in case something were to happen to them outside of working hours.
6. Business Interruption Insurance
Sometimes, events can unfold that can interrupt the working of your business such as a fire. And not being able to operate your business results in loss of income.
Business Interruption Insurance provides compensation for days where your business lost its income. This will help you pay the employees or pay off any standing dues that were caused when your business wasn’t able to operate.
The coverage of Business Interruption Insurance is based on the past records of business income. The extent of coverage is determined by the insurance provider. With a really good insurance provider, you can even get coverage for transport costs that would incur if you were to move your business to a new place.
If your business delves in digital technologies or services, then you will definitely need a Cyber Liability and Privacy Insurance. The insurance will cover the losses that happen to your business due to data breaches or cyber crimes against you.
Since more and more businesses are adopting the online business model, the need for Cyber Liability and Privacy Insurance carries more weight than ever before.
8. Vehicle Insurance
In the UAE and many parts of the world, vehicle insurance is mandatory. If your business own more than two vehicles, you are eligible for fleet insurance. The benefit of choosing fleet insurance is that it a single insurance that can be applied to all the vehicles.
It saves you both time and money, plus you don’t have to bother with individual insurances and their paperwork. The ease of use is also felt when claims are made as the process is much quicker and easier.
Choose the best for your business, we are at your service!
Starting a business can be nerve-racking, and choosing an insurance policy can be confusing. However, they are important for the sustainability of your business.
Leave the hard work to us, we will help you choose what is best insurance policies for your business. Our experts will review your business and suggest the best insurance policies based on the type of your business and growth stage from the best insurers in UAE. Contact New Age Insurance Brokers today and grow your business today.
Small and Medium Enterprises (SMEs) i.e. businesses with a turnover of less than AED 250 Million are the backbone of Dubai’s economy, representing 95% of all establishments in the Emirate. These SME businesses account for 42% of the workforce and contribute around 40% to the total value add generated in Dubai’s economy. The power behind this engine is the business owner/key person.
Defining Keyman Insurance
It is the dream, vision and risk-taking ability of the owner that gives birth to the business and through his hard work, it flourishes. Banks lend to and suppliers work with the businesses because of the ability of the owner/key person to make profits and keep financial commitments.
While a business normally insures all its assets (building/stocks etc.) However, it sometimes forgets to insure is most valuable asset – the KEYMAN. Keyman could be the Founding Owner / Director / Key Technical Personnel.
Keyman Insurance protects businesses from falling in the hands of creditors/banks in the event of untimely death of the key person. In such a situation, insurance policy will pay off to the creditors / banks and business can be passed on to the next generation – debt-free. Of course, all loans are secured – but if all assets (which are under lien to the creditors/banks) go to repay those liabilities, what remains for the family?
Keyman Insurance is the cheapest form of ensuring that family / remaining shareholders get business without any liabilities, market is assured that it is business as usual and that their funds are secured in CASH and not through sale of assets.
Cost of Keyman Insurance is negligible and most organizations add it to the cost of borrowing.
Following diagrams illustrate this concept:
 THE STATE OF SMALL & MEDIUM ENTERPRISES (SMEs) IN DUBAI: A report by Dubai SME An agency of the Department of Economic Development
How does Keyman Insurance Work?
For the Key Employee
A company purchases a life insurance policy on the key employee pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the insurance payoff. The purpose of Keyman insurance is to help the company survive the blow of losing the person who makes the business work. The company can use the insurance proceeds for expenses until it can find a replacement person.
For the Partnership
Keyman Insurance in partnerships can be used to stabilize the business in the event of the death of a partner. Company ensures all the partners in the proportion of their share in the firm. Company pays the premium. In the event of death of a partner, insurance proceeds can be used to pay the deceased partner’s share in the business and surviving partner inherits the business. This arrangement avoids having to sell off company assets to pay for deceased person’s share.
Having Keyman Insurance is a very effective arrangement as most of the organizations do not have their assets in cash to take care of such contingencies and moreover, surviving partners may not wish to do business with deceased partner’s spouse and vice versa.
How we can help you
New Age Insurance Brokers is a fully-licensed (by the U.A.E. Ministry of Economy) insurance brokerage and represents many local and international companies of repute. We will assess your need and place your coverage in the most cost-effective way. If warranted, we may place business with one or more companies.
There are nearly a million new malware attacks every day and 62% of these attacks are carried out on small and medium business enterprises. It takes nearly 200 days to even discover that a data breach has occurred!
In the modern internet era, it is data everywhere. Data is stored, retrieved and transacted across businesses and industry. A strong IT infrastructure at times appears too weak in the face of the onslaught of cybercriminals and hackers. Cyber security related issues are becoming a big source of threat, which can either make or mar the future. The after-effects of a data breach can be daunting to overcome and painful to recover from. Loss of face, customers, pride and confidence are some of the immediate reactions. The financial loss, compensation, and legal issues are the final nails on the coffin.
Estimated Loss sustained during wannacry outbreak
During May 2017, wannacry ransomware outbreak made companies lose more than $4 billion in just under a week, infecting over 30,000 machines across the world. We will not delve further into the intricacies of the vulnerability or the technical details behind it, but rather focus on how cyber insurance can help companies tackle such attacks and overcome them with peace of mind.
How does Cyber Insurance help?
Data breach or loss or leakage of customers’ personal data is ground for hefty penalties in several countries. Privacy of data is to be ensured at all costs. Therefore, to minimize losses, under cyber insurance policies, insurance companies provide the services of a crisis-management team, (experts in cyber security), immediately when a data breach is noticed. The crisis management team arrests the further slide of data, plugs loopholes in the system, attempts to repair and rebuild company reputation and estimates the losses suffered or the costs associated with the breach.
Cyber liability cover gives both First-party and third-party. First party coverage is the loss and expenses sustained by the holder of the policy, while third-party coverage protects victims of data theft or other cyber-crimes. Cyber insurance helps a company cover the costs of compensation, penalties and the expenses associated with data protection and data retrieval. Apart from this, claims arising out of the failure of the victim to secure personally identifiable information of a third party are also covered. Regulatory actions, privacy breach and failure to detect or disclose a security failure are some of the other issues covered under cyber insurance. Even the notifications, public relations exercise (For example, informing customers not to panic or that their data and money is safe etc.), legal guidance are all included in the coverage.
The outage period or interruptions and the loss sustained due to such interruptions are covered. Ransomware infections lock a computer and demand a ransom amount to get them ‘unlocked.’ This ransom payment is also covered under cyber insurance.
The outlook for the next decade
As we get more and more electronically connected, cyber threat is real and is here to stay. It all depends on how an organization copes up with it. The effort should be to minimize the financial and other implications of the cyber attack. The ability of the organizations to make informed decisions prior to the attack and their preparedness for facing any eventuality is the key to successful crisis management. An appropriate cyber insurance policy will help you tide over the crisis with ease.
At NAIB, we know the importance of sensitive data and how it affects your business interests. Our comprehensive range of cyber security schemes covering network security, cyber liability and privacy for first and third party risks shall help you sail through the risks associated with cyber threats at competitive rates.